2 hours ago
6
November 18, 2024 | 09:13 pm
TEMPO.CO, Jakarta - The implementation of a 12% value-added tax (VAT) rate next year is expected to lead to price increases for certain consumer goods. Solihin, Chair of the Indonesian Retail Entrepreneurs Association (Aprindo), anticipates a shift in consumer spending patterns as a result of this change.
Although basic necessities are exempt from VAT according to Law Number 7 of 2021 concerning Tax Regulation Harmonization, other goods, such as electronics and fashion items, will become more expensive. This price increase may prompt consumers to reevaluate their brand loyalty and adjust their purchasing behavior.
Solihin assessed that Indonesian consumers are brand-loyal, but they are also price-sensitive. “Because of the significant price increase, they may explore alternative brands or adjust their consumption habits,” he told Tempo on Monday, November 18, 2024.
Aprindo, Solihin said, is currently assessing the potential impact of the VAT rate increase and formulating strategies to mitigate the effects on purchasing power. The association plans to submit recommendations to the government after observing the real-world impact of the new VAT rate.
According to the Finance Ministry’s website, the VAT Law employs a "negative list" approach, meaning that all goods are subject to VAT unless specifically exempted. Taxable goods include electronics, clothing, land and buildings, furniture, processed foods, and motor vehicles.
Finance Minister’s Regulation (PMK) Number 71/PMK.03/2022 specifies that services such as package delivery, travel services, religious travel services, voucher provision, and domestic airline tickets are subject to VAT.
Exemptions from VAT apply to basic necessities, food served in restaurants, money and gold bullion, crude oil, raw minerals, health services, social services, finance, insurance, religious education, arts, labor, hospitality, money transfers, and catering services.
Editor’s Choice: Finance Minister Sri Mulyani's Statement on the Increase of VAT to 12 Percent From January 2025
Click here to get the latest news updates from Tempo on Google News
Finance Minister Sri Mulyani's Statement on the Increase of VAT to 12 Percent From January 2025
3 hari lalu
Finance Minister Sri Mulyani claims that the 12 percent increase in VAT considers the conditions in various sectors.
10 Largest Retailers in the World, Walmart Ranks First
19 hari lalu
The retail landscapes show competitive performance of each company. With Walmart places first, discover more the largest retailers in the world here!
VAT Hike Plan: Transportation Ministry Spills Possible Increase in Flight Ticket Prices
34 hari lalu
Indonesian Transportation Ministry broaches the possibility of flight ticket price hikes alongside the increase of value-added tax (VAT) to 12 percent
Greenwashing Raises Red Flags with Indonesian Consumers
48 hari lalu
Consumers including millennials choose carefully, increasingly aware of deceptive environmental claims by businesses, which is called greenwashing.
Indonesia Records Over Rp27tn of Tax Revenue on Digital Economy Sector
13 September 2024
Indonesian Ministry recorded tax revenues from the digital economy sector reaching Rp27.85 trillion from 2022 to the end of August 2024.
10 Digital Product Ideas You Can Create to Earn Profit Online
12 September 2024
Digital products have become a leading business idea in the wake of online retail. Find out how to do digital products and where to sell them here.
Ace Hardware to Leave Indonesia as of December 31, After 29 Years
3 September 2024
After 29 years, PT Aspirasi Hidup Indonesia Tbk did not continue the license agreement with ACE Hardware International Holdings, Ltd.
Sri Mulyani Says VAT Hike Being Discussed with Prabowo
28 Agustus 2024
Finance Minister Sri Mulyani says that her side is actively coordinating with President-elect Prabowo Subianto to discuss the policy of VAT hike.
How Consumers Can Influence Who Controls AI
25 Agustus 2024
AI development is currently held by a small number of companies. Public vigilance can help ensure they stick to ethical use of the technology.
Apindo: Next Year's VAT Hike to 12% Can Boost State Revenue by 80%
13 Agustus 2024
Indonesia's value-added tax or VAT is expected to increase from the current 11 percent to 12 percent next year, Apindo says.
