Not PPh, Government Steps To Increase VAT Follow Global Trends: It's Easier To Increase State Revenue

Illustration (Photo: Doc. Ministry of Finance)

JAKARTA - The government's stance in increasing the Value Added Tax (VAT) rate from 10 percent to 11 percent starting April 1 has received special attention from the General Chairperson of the Indonesian Higher Education Tax Center Association (Atpetsi) Darussalam.

According to him, currently many countries rely on two types of tax revenues, namely Income Tax (PPh) and Value Added Tax (VAT).

"The problem now is that getting tax revenue from PPh is no longer easy because many of the modes of double tax avoidance carried out by taxpayers (WP) cannot be detected so quickly. That's why many countries think and switch to placing VAT as the mainstay of tax revenue," he said in a virtual discussion on Tuesday, April 5.

Darussalam added that this factor made the government then direct the increase in the revenue sector from VAT.

“So, because it is getting more difficult to receive income tax, many countries are turning to VAT. And actually if we look at many countries, VAT receipts are close to PPh," he said.

The DDTC boss also revealed another reason why VAT continues to be boosted.

"Then why is VAT now the mainstay? Because VAT in the context of state revenue is easier to apply than PPh, especially during a pandemic. So if we look at reforms in many countries, they really focus on how the revenue can be obtained from VAT or from consumption," he said.

“From experience in 2008 it was stated that when we came out of the crisis, consumption grew faster than income. Therefore, the imposition of consumption-based taxes, in this case VAT, is a strategic target," he stressed.

Darussalam also ensured that optimizing the VAT rate was an effort to be in line with global and international trends.

"So this VAT is carried out in many countries and not only in Indonesia. So what the government is doing is not weird because we are not alone," concluded Darussalam.