Heaptalk, Jakarta — Indonesia’s government has issued further statements regarding announcing a Value-Added tax (VAT) increase to 12% and a new tax on sweetened beverages set for 2025.
Indonesia’s Finance Minister, Sri Mulyani, said that the government is still coordinating with President-elect Prabowo Subianto regarding raising the VAT rate to 12% and the tax on sweetened beverages.
“We are continuously communicating and consulting with the President-elect,” said Minister Sri.
According to the Minister, several aspects of the State Budget (APBN), including revenue and spending strategies, are still being discussed with the President-elect’s team. Besides the VAT, another critical issue is the tax on sweetened beverages in packaging (MBFK).
However, Prabowo will announce the final policy decision after his inauguration as president.
“Indonesia’s President-elect Prabowo will finalize and communicate policies with significant social, political, and economic impacts. We are in constant, intensive coordination,” she said.
The Finance Minister explained that Prabowo Subianto was aware of the policies outlined in Law No.7 of 2021 on the Harmonization of Tax Regulations (UU HPP). In Article 7, Paragraph 1, the UU HPP specifies that the VAT rate, initially 10%, was raised to 11% effective April 1, 2022, and will increase further to 12% no later than January 1, 2025.
Nevertheless, the law also allows for flexibility, enabling the VAT rate to be adjusted between a minimum of 5% and a maximum of 15%.
The government aims to boost state revenue by 6.4% next year, reaching about Rp2,996 trillion. Around Rp2,490 trillion is expected to come from tax revenue.
“We will assess the economic potential, tax ratio, and other factors such as tax extension,” she added.
The Finance Minister also emphasized that the government has already provided VAT exemptions for essential goods, education, healthcare, and transportation. She noted that these incentives mainly benefit middle to upper-income groups.
“The UU HPP clearly states that essential goods, education, healthcare, and transportation are exempt from VAT,” concluded Sri Mulyani.
