Getting Ready! VAT Rate Will Increase To 12 Percent

JAKARTA - The government plans to increase the value-added tax (VAT) rate to 12 percent from the previous 10 percent. The plan to increase the VAT rate will be outlined in the Revised Law (RUU) Number 5 of 1983 concerning General Provisions and Tax Procedures (KUP).

The increase in the VAT rate of 12 percent is clearly stated in Article 7 paragraph 1 of the Draft KUP Bill which will be discussed with the House of Representatives of the Indonesia Republic.

"The rate of value-added tax is 12 percent", reads Article 7 paragraph 1, quoted by VOI, Wednesday, June 9.

If you look at the draft KUP Bill, Article 7 paragraph 3 explains that VAT can be reduced as low as 5 percent and as high as 15 percent. So the discourse of increasing the amount of VAT by the government is possible.

"Changes in the rate of Value Added Tax as referred to in paragraph (3) shall be regulated by a Government Regulation ...", Article 7 paragraph 4.

Then, the government also added a new article, namely Article 7A which explains that VAT can be subject to different rates depending on the type of goods/services.

Such as delivery of certain taxable goods/services, import of certain taxable goods, utilization of certain intangible taxable goods, and utilization of certain taxable services from outside/within the customs area.

"The different tariffs as intended are subject to a minimum of five percent and a maximum of 25 percent", reads Article 7A paragraph 2.

As is known, the government plans to increase the rate of VAT. The goal is to optimize tax revenue in the coming years. This plan will be discussed between the Ministry of Finance and the Coordinating Ministry for the Economy because it will have an impact on all sectors.

Secretary of the Coordinating Ministry for the Economy, Susiwijono Moegiarso, said that there has been no discussion between ministries regarding the plan to increase the VAT rate. According to him, the plan is still being discussed internally at the Ministry of Finance.

"The point is that we respect the discussion of internal discourse at the Ministry of Finance, but there is no inter-ministerial coordination meeting to discuss this", he said in a virtual press conference, Monday, May 17.

The increase in VAT rates has an impact on all sectors

Susiwijono said that his party would immediately ask for an explanation regarding the plan to increase the VAT rate to the Ministry of Finance if there was a definite plan. Because this policy will affect all sectors.

"Surely later we will ask for an immediate schedule if there is a definite plan and there is a clear conception of when it will be delivered. Because this will affect all sectors, not only the real sector, all manufacturing industry sectors will be affected, that's why we have reported it", he explained.

According to Susi, the Coordinating Ministry for the Economy promised to provide a more detailed explanation of the planned VAT rate increase in the next two days or Wednesday, May 19.

"In 1-2 days, I will discuss it with my friends from the Ministry of Finance and later on Wednesday we will explain in full", he said.

The increased plan will be submitted to the House of Representative

Coordinating Minister for the Economy Airlangga Hartarto said that the government's efforts to increase VAT were currently still under discussion. Even so, he acknowledged that this plan would be included in the draft law (RUU) on General Provisions and Tax Procedures (KUP).

"The government is still discussing the VAT rate, and this is also related to the discussion of the Law (UU) that will be submitted to the House of Representative, namely the Bill on General Provisions and Tax Procedures (KUP), and all of this will be discussed by the government later in time. delivered", he said in a virtual press conference, Wednesday, May 5.