Sri Mulyani Issues 12 % VAT Regulations, Here's the Details

January 1, 2025 | 09:28 pm

TEMPO.CO, Jakarta - Indonesian Finance Minister Sri Mulyani Indrawati has officially signed the Finance Minister's Regulation (PMK) overseeing the value-added tax or VAT increase from 11 to 12 percent. The PMK 131/2024 was promulgated on December 31, 2024, and officially came into effect on January 1, 2025.

The regulation stipulates that 12 percent VAT will be imposed on luxury goods. According to Article 2, Paragraph 3 of the regulation, the category of goods subject to 12 percent VAT is motorized vehicles and non-motorized vehicles that are subject to the luxury goods sales tax (PPNBM) based on tax laws.

The government regulates two mechanisms for calculating VAT levies. "From January 1, 2025, to January 31, 2025, the VAT payable will be calculated by multiplying the 12 percent rate by the taxable base in the form of another value of 11/12 (elevenths of a twelfth) of the selling price," as written in the regulation.

This means that in January, the VAT payable will be calculated at 12 percent, but with a tax base calculated at 11/12 of the sales price of the goods. On February 1, 2025, the calculation is made by multiplying the 12 percent rate by the tax base in the form of the sales price or import value of the goods.

Earlier, Sri Mulyani announced the cancelation of the VAT increase on several goods and services. Initially, the government only exempted three goods that were not subject to 12 percent VAT, namely Minyakita cooking oil, flour, and industrial sugar.

"All goods and services that were subject to 11 percent VAT have not changed, which means there is no increase in VAT and they still pay 11 percent VAT," Sri Mulyani wrote on her Instagram account @sminrawati on Wednesday, January 1, 2024.

Meanwhile, goods and services that were previously exempt from VAT, such as necessities in the form of rice, are still exempt from the levy. Luxury goods that will be subject to 12 percent VAT are those currently classified under the Luxury Goods Sales Tax (PPNBM).

Outside of motor vehicles, the rules for PPnBM items are contained in PMK 15 of 2023 on Types of Taxable Goods Other Than Motor Vehicles Subject to PPnBM and Procedures for Exemption from PPnBM Imposition. The tax rate ranges from 20 to 75 percent.

The categories of goods subject to PPnBM include residential groups such as luxury houses, apartments, condominiums, townhouses, and the like with a selling price of Rp30 billion or more. Also includes hot air balloons, private planes, yachts, and luxury motor vehicles.

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