Heaptalk, Jakarta — The Directorate General of Taxes (DGT) at the Ministry of Finance has confirmed that the value-added tax (VAT) rate will rise to 12% starting January 1, 2025. The increased VAT will not apply only to luxury goods but broadly, excluding essential goods crucial for public welfare.
“This means the VAT increase from 11% to 12% VAT does not only affect luxury goods,” said Dwi Astuti, Director of Public Education, Services, and Public Relations at the DGT, in an official statement on Monday.
Dwi noted that certain goods, such as bulk cooking oil, wheat flour, and industrial sugar, will be exempt from this increase. “For these three items, the additional 1% VAT will be borne by the government (DTP), ensuring that the price adjustment will not impact their costs,” she explained.
Essential goods and services for basic needs will continue to benefit from VAT exemptions or a 0% VAT rate. These include rice, paddy, corn, sago, soybeans, salt, meat, eggs, milk, fruits, and vegetables.
Additionally, essential services such as medical, social, financial, and insurance, education, public transportation by land and water, labor, and low-cost housing rentals will enjoy a 0% VAT rate. Other exempt items include books, holy scriptures, polio vaccines, affordable housing, electricity, and clean water.
The government has also committed to providing additional VAT incentives totaling approximately Rp265.6 trillion for 2025.
Dwi explained that the VAT rate increase has been implemented gradually since 2022, as mandated by Law No. 7/2021 on the Harmonization of Tax Regulations (UU HPP). The rate was raised from 10% to 11% on April 1, 2022, and will increase to 12% starting January 1, 2025.
