Comparison of VAT Rates in Southeast Asia, Is Indonesia the Highest?

November 22, 2024 | 11:51 am

TEMPO.CO, Jakarta - The Indonesian government will increase the value-added tax (VAT) rate by 12 percent on January 1, 2025. This policy is stipulated in Law No. 7 of 2021 Article 7 paragraph (1) drafted by the Indonesian Working Cabinet led by President Jokowi.

According to the Taxsummaries.pwc website, the Philippines also has a 12 percent VAT that is calculated based on the gross sales price of goods or property sold or gross receipts from the sale of services.

The Philippine Bureau of Customs determines VAT based on volume or quantity. The Philippine VAT base is the landed cost plus excise tax (if any). However, the Philippines exempts certain service sales from VAT, including financial intermediary services, which are subject to a percentage tax based on gross sales, receipts, or income.

A researcher from the Center of Industry, Trade and Investment Indef, Ahmad Heri Firdaus, mentioned the list of VAT of ASEAN countries as a comparison to the 12 percent VAT that will be implemented in Indonesia. He listed the ASEAN countries in order of VAT rates from highest to lowest:

1. The Philippines: VAT rate of 12 percent.
2. Indonesia: VAT rate of 12 percent.
3. Vietnam: VAT rate of 10 percent.
4. Laos: VAT rate of 10 percent.
5. Myanmar: VAT rate of 10 percent.
6. Cambodia: VAT rate of 10 percent.
7. Singapore: VAT rate of 7 percent.
8. Thailand: VAT rate of 7 percent.
9. Malaysia: VAT rate of 6 percent.
10. Brunei Darussalam: No VAT rate or 0 percent.

Among the comparison of the VAT rates of the ASEAN countries, the 12 percent VAT stands as the highest. According to Ahmad, Indonesia will become the country with the highest VAT rate of 12 percent in Southeast Asia.

"So if Indonesia's VAT reaches 12 percent, Indonesia will be [the country with] the highest [VAT rate] in Southeast Asia," Ahmad explained on March 20, 2024.

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