Heaptalk, Jakarta — Following a meeting with President Prabowo Subianto at the Palace on Thursday (12/05), senior members of the Indonesian House of Representatives (DPR RI) announced that the Value Added Tax (VAT) rate would still rise to 12%, but only for consumers purchasing luxury goods.
The Chair of the DPR RI’s Commission XI, Misbakhun, explained that the 12% VAT rate for luxury goods resulted from their discussions with President Prabowo. “This will be implemented selectively, targeting specific communities for domestic and imported luxury goods. The government is ensuring this tax burden applies only to luxury goods buyers,” Misbakhun said during a press conference at the Palace.
The government will also explore the possibility of implementing non-uniform VAT rates. He said, “The current VAT rate will still apply to small communities. The government is studying the idea that VAT might not remain at a single rate,” he said.
The 12% VAT rate is scheduled to take effect on January 1, 2025, as the law mandates. However, Misbakhun assured the public that essential goods, education services, healthcare, and banking will remain VAT-exempt. “President Prabowo is also committed to addressing issues related to illegal activities, which will boost state revenue that has previously gone undetected,” Misbakhun added.
Coordinating Minister for Economic Affairs Airlangga Hartarto stated that many items will still be exempt from VAT. He emphasized that not all goods will be subject to the 11% or 12% VAT rates. “VAT will be discussed and finalized in upcoming meetings. I can say that not all goods are subject to VAT, whether 11% or otherwise. Essential goods and key necessities are largely exempt from VAT,” Airlangga concluded.
