Jakarta, Indonesia Sentinel — The Indonesian government officially announced an increase in the Value-Added Tax (VAT) rate from 11% to 12%, effective Wednesday, January 1, 2025 in Indonesia. President Prabowo Subianto reaffirmed that the new 12% VAT rate will only apply to luxury goods.
The 12% VAT adjustment officially taken effect as scheduled, aligns with Law No. 7 of 2021 on the Harmonization of Tax Regulations. Speaking at a press conference at the Ministry of Finance on Tuesday, December 31, 2024, President Prabowo emphasized that the increased tax targets luxury goods and services exclusively.
“The VAT increase from 11% to 12% will only apply to luxury goods and services,” Prabowo said, as reported by Kompas.
Finance Minister Sri Mulyani explained that the affected luxury items fall under the existing Luxury Goods Sales Tax (PPnBM) categories, which are already regulated under Minister of Finance Regulation No. 15/PMK.03/2023.
“All other goods and services remain taxed at 11%, with no increase. The 12% rate applies exclusively to highly luxurious items specified in PMK 15/2023, and the list is very limited,” Sri Mulyani stated.
Luxury Goods Subject to 12% VAT
Reffering to the Finance Regulation No. 15/PMK.03/2023, here is the list of luxury goods subject to 12% VAT starting January 2025 in Indonesia:
1. Luxury Residential Properties
- Luxury homes
- Apartments
- Condominiums
- Townhouses
- Other properties priced at IDR 30 billion or more
These items will also face an additional 20% Luxury Goods Sales Tax (PPnBM)
2. Air Balloons and Ammunition
- Hot air balloons and steerable airships, as well as other non-motorized aircraft
- Ammunition for firearms and other firearms (except those designated for state purposes, excluding air rifle pellets)
These items will also incur a 40% PPnBM.
3, Aircraft and Firearms
- Helicopters and other aircraft (except for state or commercial air transport purposes)
- Firearms and other groups of Firearms including Artillery, revolvers, and pistols (excepts state-use items)
- Firearms and similarly equipment operated with explosive charges
These items will face an additional 50% PPnBM.
4. Luxury Vessels
- Cruise ship
- Excursion ship
- Other similar watercraft primarily designed for passenger transport
- Ferries of all types (except those used for state purposes and public transportation)
- Luxury yachts (except those used for state purposes and tourism businesses)
These items will face an additional 75% PPnBM.
Read Also: Can a 12% VAT Propel Indonesia’s Economy Forward?
The Indonesia government has reiterated that the VAT 12% increase will only apply to luxury goods listed under the Minister of Finance regulation. Outside of this category, other goods and services currently subject to an 11% VAT will not see an increase to 12% as of January 1, 2025.
(Raidi/Agung)
