Minister Of Finance Purbaya Considers Lowering VAT Tariffs After Year-End Economic Evaluation

JAKARTA - Minister of Finance Purbaya Yudhi Sadewa stated that he would further review the possibility of reducing the Value Added Tax (VAT) rate, which is currently at 11 percent.

Purbaya explained that the decision related to this matter would be based on evaluating national economic conditions and state revenues until the end of the year.

"We have just increased from 10 percent to 11 percent, so we will see what the end of the economic year looks like, what kind of money I got until the end of the year," he said at a press conference on our State Budget, Tuesday, October 14.

He added that the decline in VAT has the potential to increase people's purchasing power, but this step will be carefully considered.

"I'm not very clear yet, we'll see, we can't reduce VAT. That's to encourage people's purchasing power in the future, but we study carefully," he explained.

For information, in accordance with the mandate of Law Number 7 of 2021 concerning Harmonization of Tax Regulations (UU HPP), VAT Tariffs increase to 12 percent valid January 1, 2025, valid for all Taxable Goods (BKP) and Taxable Services (JKP) which are classified as luxury goods.

However, the value of VAT for BKP and JKP that is not classified as luxury goods does not increase, because the basis for tax imposition (DPP) imposed is 11/12 of the selling price.

Thus, people still feel a burden equivalent to the previous 11 percent VAT tariff.