According to reporting from Tempo, President Prabowo Subianto has approved a limited increase in Value Added Tax (VAT) from 11 percent to 12 percent, effective from January 1, 2025. The decision was announced by the Chair of the House of Representatives (DPR) Commission XI, Mukhamad Misbakhun, after a meeting on VAT between the president and House leaders at the Jakarta Presidential Palace on Thursday (5/12/24.)
Misbakhun said that parliament would adhere to the laws governing this VAT increase. He also emphasized that the 12 percent VAT would only apply to specific commodities, encompassing both domestic and imported luxury goods, reports Tempo.
“The government will implement a 12 percent VAT for consumers purchasing luxury goods. The current VAT rate will remain in effect [for essential goods and services for the general public],” Misbakhun said.
Tempo says that Deputy Speaker of the DPR, Sufmi Dasco Ahmad, confirmed that essential goods for the public would remain subject to the current 11 percent tax rate. He mentioned that the government is exploring the possibility of reducing taxes on essential goods for the public.
“Currently, a more in-depth study is being conducted where the VAT in the future will not be at the same rate,” Dasco explained.
Minister of State Secretary Prasetyo Hadi explained that the discussions on this VAT increase are a collaborative process aimed at benefiting society. Therefore, a prompt response to this policy is crucial. “So today (5/12/24,) the president, together with the leaders of the DPR, discussed this matter,” he said.
Source: Tempo
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