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December 7, 2024 | 10:09 am
TEMPO.CO, Jakarta - President Prabowo Subianto assures that the VAT increase will be implemented in accordance with the law starting in January 2025. However, Prabowo emphasizes that the 12 percent VAT will be applied with exceptions.
''Selectively only for luxury goods, we will still protect the other people, since the end of 2023, the government has not imposed what should be collected. To defend, to help ordinary people," Prabowo said in a statement at the Presidential Palace complex on Friday afternoon, December 6, 2024. "So even if it's increased, it's only for luxury goods."
Finance Minister Sri Mulyani revealed the government's plan to raise the value-added tax to 12 percent on Jan. 1, 2025. This policy will be implemented to maintain a healthy government budget. She announced during a working meeting with the House of Representatives Commission XI on Thursday, November 14, 2024.
The House of Representatives leaders then held a meeting with President Prabowo at the Presidential Palace in Jakarta on Thursday, December 5, 2024, regarding the VAT. The government and the House are reviewing various VAT rates that will be applied.
The House chief of Commission XI, Mukhamad Misbakhun, said that his office will also follow the law regarding the VAT increase on January 1, 2025. The government and the House of Representatives are conducting a deeper study that the VAT will not be in a single rate.
Deputy Speaker of the House of Representatives, Sufmi Dasco Ahmad, said that basic goods related to services that affect the public will still be subject to tax now at 11 percent. Prabowo is considering the proposal to reduce the VAT on basic goods. The proposal originally came from several members of the council.
Deputy Director of the Economic and Financial Development Institute (Indef), Eko Listiyanto, said the VAT hike would undermine public consumption and thus slow down the economy. Moreover, the VAT increase comes amid Indonesia's slowing economy.
''If an economic slowdown occurs, then coupled with the government's efforts to increase VAT, it will automatically erode consumption in general,'' Eko said in a public discussion held virtually on Monday, November 18, 2024.
Meanwhile, Indef researcher, Ahmad Heri Firdaus, also said that the increase in VAT rates will affect an increase in production costs. The flow starts from the industrial sector, which buys raw materials to be processed into semi-finished goods, and then these semi-finished goods are purchased again by the industry with VAT.
Editor's Choice: Prabowo Approves VAT Hike to 12% Next Year But Only for Luxury Goods
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