- Indonesia will increase the VAT rate to 12 percent starting January 1, 2025
- Essential staples like rice, beef, fish, and vegetables will remain exempt from VAT
- The government will absorb an additional 1 percent VAT on certain staples like flour and cooking oil temporarily
- To mitigate the VAT impact, the government will provide 10 kilograms of rice monthly to 16 million low-income households for two months
- Households with electricity usage up to 2,200 volt-amperes will get a 50 percent discount on power bills in January and February
- A partial VAT waiver on certain house purchases will continue until mid-2025 and then be reduced by 50 percent
- Tax incentives will be offered for electric vehicle purchases and income tax cuts for qualifying workers
- Luxury food items and high-end services will now be subject to the new 12 percent VAT rate
- The incentive package is estimated to cost IDR 30-40 trillion while the VAT hike could generate IDR 75 trillion in additional revenue
- The previous VAT increase from 10 to 11 percent in April 2022 had minimal economic impact
- Economists express concerns about the timing of the VAT hike due to the global economic slowdown and weaker purchasing power
Source: borneobulletin.com.bn
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.
