Indonesia to impose 12% VAT from 2025
The Indonesian Government plans to apply a 12% value-added tax (VAT) next year, marking a 1 percentage point increase from the current rate, according to a senior official.
Chief Economic Minister Airlangga Hartarto said that this adjustment is in accordance with the law on the harmonisation of taxation regulations issued in 2022.
Shoe shops in a market in Indonesia. Photo courtesy of jakartaglobe.id
The 2022 law mandates the phased implementation of VAT hikes, with the 12% rate set to be imposed by January 1, 2025, at the latest. The VAT was previously raised from 10% to 11% on April 1, 2022.
Airlangga said the government is currently formulating macro-economic and fiscal policies, including the new VAT rate, as the basis for drafting the 2025 state budget.
While the new VAT rate is expected to boost state revenues, the final 2025 draft budget won’t be ready before the General Election Commission (KPU) formally announces the winner of the presidential election scheduled for March 20, Airlangga explained
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