Jakarta, Indonesia Sentinel — President Prabowo Subianto has reiterated that the the Value-Added Tax (VAT) rate increase to 12% will apply exclusively to luxury goods in Indonesia. Effective starting January 1 2025, this 12% VAT increase will not affect essential goods or services widely consumed by the general public.
During a press conference at the Ministry of Finance headquarters in Jakarta on Tuesday (December 31, 2024), Finance Minister Sri Mulyani emphasized that all goods and services currently subject to an 11% VAT will remain unchanged.
“The VAT rate remains at 11%. There will be no increase for all goods and services currently taxed at this rate,” Sri Mulyani stated, as reported by KataData. She added that essential goods and services, which currently benefit from a zero-percent VAT (VAT 0%), will continue to be exempt.
Essential Goods Maintained at 0% VAT
According to report from CNN Indonesia, the following essential goods will remain VAT-exempt:
- Rice
- Corn
- Soybeans
- Fruits
- Vegetables
- Sweet potatoes
- Cassava
- Sugar
- Peanuts
- Other legumes
- Other grains
- Livestock and their products
- Fresh milk
- Poultry
- Slaughtered animal products
- Fish
- Shrimp
- Other marine life
- Seaweed
Services Exempt from VAT Hike
Additionally, VAT 0% will continue to apply to key services, including:
- Train tickets
- Airport tickets
- Passenger transportation
- Public transportation services
- River and ferry transportation
- Specific large-scale logistics services
- Travel agency services
- Education services, both public and private
- Textbooks and religious scriptures
- Medical services, both public and private
- Financial services, including pension funds
- Other financial services, such as financing and credit cards
- Life and property insurance
Read also: Indonesia VAT 12% Takes Effect! Prabowo Reaffirms Implementation Only on Luxury Goods
Minister Sri Mulyani stressed that essential goods and services benefiting from VAT 0% will not face any tax adjustments. Likewise, goods and services widely consumed by the general public currently taxed at an 11% VAT will remain unaffected by the 12% VAT increase rate.
“All these essential items and services will continue to enjoy VAT 0%, meaning no VAT will be imposed. Meanwhile, goods and services taxed at 11% will remain at 11%, without being subject to the 12% increase,” she concluded.
(Raidi/Agung)
