Government-Borne VAT and STLG Scheme, An Option to Compensate for the 12% VAT Increase

JAKARTA. The government is preparing a scheme for Value Added Tax (VAT) and Sales Tax on Luxury Goods (STLG) to be borne by the government (DTP) as compensation for the VAT rate increase to 12%.

Citing CNBCIndonesia.com, this facility will be provided for several sectors affected by the 12% VAT hike.

According to Susiwijono Moegiarso, Secretary of the Coordinating Ministry for Economic Affairs, the government is currently conducting studies, including determining the scale and sectors eligible for the incentive. "This is still in the finalization stage; we're calculating everything," Susiwijono stated on Monday (December 9, 2024).

The government is expected to issue a regulation regarding this incentive in December 2024. Further details will be announced by the Ministry of Finance.

Existing VAT and Luxury Tax

The government-borne VAT policy is not a new incentive scheme. The government has previously provided government-borne VAT incentives for two sectors: property and motor vehicles.

In the context of the 12% VAT increase, the introduction of government-borne VAT or STLG incentives aims to support public purchasing power.

As we know, under the Harmonization of Tax Regulations (HPP) Law, the VAT rate will rise from 11% to 12% starting January 1, 2025.

Previously, the President of the Republic of Indonesia, Prabowo Subianto, stated that the 12% VAT increase would only apply selectively to luxury goods. (ASP/KEN)