Selective Imposition, Government Sets 12% VAT Only for Luxury Goods

JAKARTA – The government has confirmed that the Value-Added Tax (VAT) will be increased to 12% starting in January 2025. However, this increase will be selective and apply only to luxury goods.

This certainty was disclosed by the Deputy Speaker of the House of Representatives (DPR), Sufmi Dasco, following a meeting with President Prabowo Subianto on Thursday (12/6) at the Presidential Palace in Jakarta.

According to Sufmi, as quoted by Kontan.co.id, the VAT rate for basic goods widely consumed by the public will remain at a fixed rate of 11%.

This was further affirmed by the statement of the Chairman of Commission XI, Misbakhun, who mentioned that luxury goods subject to the 12% VAT could include both domestic and imported items.

Thus, the policy outlined in the Law on Tax Regulation Harmonization (HPP) will still be implemented. "The government will only impose this burden on consumers purchasing luxury goods," said Misbakhun.

Considering Multitariff Options

He also reminded that, so far, the government has provided VAT exemptions for items such as essential goods, educational services, healthcare services, banking services, public services, and government services.

Additionally, the government plans to implement a non-uniform VAT rate or multi-tariff system. However, this is still under review by the government. (ASP/KEN)