VAT Tariffs Increase To 12 Percent By 2025, The Ministry Of Finance Will Study The Development Of Politics And The Indonesian Economy

The Directorate General of Taxes (DGT) of the Ministry of Finance (Kemenkeu) has opened its voice regarding the plan to adjust the value added tax rate (VAT) to 12 percent by 2025.

Director General of Taxes Suryo Utomo assessed that his party would communicate regarding the implementation of the 12 percent VAT rate increase by considering the transition of new government and political dynamics.

"With regard to the transition of government, it is necessary for a political fatsun to communicate related to the VAT rate, which is 12 percent," Suryo said at the Press Conference, quoted on Tuesday, March 26.

Suryo said that his party would also consider and see the condition of the domestic economy which would greatly affect the increase in VAT to 12 percent in the future.

"We continue to review the existing economic conditions, the surroundings of economic activities that greatly affect the increase in VAT in the future. So really we are still waiting for developments in the next discussion," he concluded.

For information, the decision is contained in Law Number 7 of 2021 concerning Harmonization of Tax Regulations (HPP). Article 7 states that the increase in VAT to 11 percent will take effect from April 1, 2022 and the increase will occur again on January 1, 2025 to 12 percent.

Previously, Minister of Finance Sri Mulyani Indrawati opened her voice regarding the implementation of the Value Added Tax (VAT) policy to 12 percent as of January 1, 2025.

"The 12 percent VAT has also been discussed, including the political fatsun of the HPP Law, which we all discussed, have agreed but we respect the new government," he explained during a working meeting with Commission XI at the DPR/MPR Building, Jakarta, Tuesday, March 19, 2024.

According to Sri Mulyani, the new government has the right to change the policy that was previously agreed upon and could be adjusted to the directions and policies promised during the campaign.

"So if the VAT target remains 11 percent, it will be adjusted later," he explained.

In addition, Sri Mulyani said that she would design the 2025 State Budget according to the limits that have been regulated in the State Finance Law. Namely, the State Budget will be designed in the form of a baseline, meaning that it only contains mandatory and routine government spending. So that from this posture, there will be fiscal space that can be utilized by the new government in the first year.

"We will signal how big the fiscal space is," he said.