JAKARTA - Minister of Finance Sri Mulyani Indrawati stated that the increase in the value added tax or VAT rate will remain in effect from April 1, 2022.
Sr Mulyani said the government would continue to carry out the mandate of Law Number 7/2021 concerning the Harmonization of Tax Regulations (UU HPP) which states that the VAT rate will increase to 11 percent on April 1, 2022.
"The VAT rate increase is not postponed because the government uses it to return to society. The foundation must be prepared first through strengthening the tax regime," said Sri Mulyani at the CNBC Economy Outlook, Tuesday, March 22.
Sri Mulyani further explained that the average global VAT rate is 15 percent. Indonesia itself has a tariff of 10 percent, so according to Sri Mulyani there is still room to increase it.
According to him, state revenue is an important aspect to encourage economic recovery, because it can support various subsidies and development. Therefore, the HPP Law increases the potential for receipts in various posts, such as income tax (PPh) and VAT.
"We see that VAT space still exists, we increase it by only 1 percent. We understand that the focus is now on economic recovery. However, a strong tax foundation must be built," he said.
Sri Mulyani said that VAT was closely related to the people's consumption ability. Therefore, the government distributes social cushions to maintain the level of public consumption, especially the lower classes.
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