Inp.polri.go.id - Jakarta. President Prabowo Subianto officially announced a rise in Value-Added Tax (VAT) from 11% to 12%, effective 1 January 2025, which applies exclusively to luxury goods and services, as outlined in the Harmonization of Tax Regulations Law (Law No. 7 of 2021).

"This adjustment targets luxury items like private jets, yachts, and extravagant homes.  Essential goods and services remain unaffected by this increase.," he clarified during a press briefing at the Ministry of Finance on Tuesday (31/12/2024).

To protect public purchasing power, the government has introduced exemptions and incentives for basic necessities such as rice, eggs, fresh milk, public transport, and affordable housing. Items critical to daily life, like electricity and drinking water, remain exempt from VAT.

In addition, a 1% government subsidy will keep the VAT rate at 11% for staple goods, including cooking oil, flour, and industrial sugar, under the Essential Goods Stimulus program.

Minister of Finance Sri Mulyani emphasized these measures aim to balance economic equity while ensuring the policy minimizes its impact on the broader population.

The 12% VAT increase marks a phased approach toward strengthening Indonesia’s fiscal framework without burdening low-income households.

(mg/inp/pr/nm)