Heaptalk, Jakarta — The Government of the Republic of Indonesia, through the Coordinating Ministry for Economic Affairs, has announced an economic policy package to accelerate inclusive and sustainable economic growth, including a VAT 12% policy.
According to the Coordinating Minister for Economic Affairs, Airlangga Hartarto, in a press release on Monday (16/12), this economic policy package must be communicated before implementing the Value Added Tax (VAT) increase to 12% starting January 1, 2025. The economic policy package includes measures related to VAT with a multi-tiered approach and non-tax economic policies.
“One of the key components of the economic policy package to be announced is the relaxation of taxes for micro, small, and medium enterprises (MSMEs). There will also be incentives for MSMEs,” explained Airlangga.
Meanwhile, regarding the 12% VAT, the government has previously outlined the tax objects subject to multi-tiered tax rates. Luxury goods will be subject to a VAT rate of 12%. Additionally, some tax objects will remain exempt from VAT, and others will continue to be taxed at 11%. These measures are part of the new economic policy package to be announced today.
Minister of Finance Sri Mulyani confirmed that the VAT increase to 12%, effective in 2025, will not impact essential goods. Daily necessities, such as rice, meat, electricity, and similar items, will remain exempt from VAT, maintaining a 0% rate.
“Rice, meat, fish, eggs, vegetables, fresh milk, consumption sugar, education, healthcare, public transportation services, labor services, financial services, insurance services, books, polio vaccines, simple homes, effortless homes, flats, electricity, and water will all continue to be subject to 0% VAT. It is estimated that the exemption of VAT for these items in 2025 will reach Rp265.6 trillion,” said Sri Mulyani.
Sri Mulyani also assured that shortly, together with the Coordinating Minister for Economic Affairs Airlangga Hartarto, she would announce a complete policy package regarding the VAT increase to 12% and its impacts on various sectors.
