- Indonesia plans to postpone the increase of value-added tax (VAT) to 12% originally set for January 1, 2025.
- National Economic Council chairperson Luhut Binsar Pandjaitan confirmed the postponement in Jakarta.
- The government intends to provide incentives to the middle class before implementing the VAT increase.
- The proposed incentive will be in the form of electricity subsidies rather than direct cash aid to ensure effectiveness and prevent misuse.
- The government will allocate a portion of the state budget (APBN) for the electricity incentive, with a distribution mechanism to be established soon.
- Finance Minister Sri Mulyani Indrawati previously stated that the VAT increase is mandated by the Tax Regulation Harmonization Law (UU HPP) enacted in 2021.
- The UU HPP includes the 12% VAT proposal, considering the basic needs and health conditions of the population during the COVID-19 pandemic.
- The government is committed to considering various sector conditions when formulating tax policies.
Source: en.antaranews.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
