Apindo Asks Prabowo-Gibran To Evaluate 12 Percent VAT Policy

Chairman of the Indonesian Employers' Association (Apindo) Shinta Widjaja Kamdani (Photo: Antara)

JAKARTA - The Indonesian Employers' Association (Apindo) has a request to the President and Vice President of Elect, Prabowo Subianto-Gibran Rakabuming Raka. The request is to evaluate the value added tax rate (VAT) of 12 percent.

"Later they (Prabowo-Gibran) can re-evaluate it, see the current conditions," said Chairman of the Indonesian Employers Association (Apindo) Shinta Widjaja Kamdani quoting Antara.

Shinta explained that the 12 percent VAT which will be implemented on January 1, 2025 is not a sudden policy. Therefore, he said, both the government and entrepreneurs had prepared themselves.

However, Shinta continued, they missed the anticipation of global economic conditions.

What should be of concern is purchasing power. Obviously, with conditions like this, the 12 percent increase will be borne by consumers. So, later the consumers will feel the increase," said Shinta.

Therefore, he hopes that the President-elect in the 2024 General Election can pay attention and consideration regarding the implementation of the increase in VAT from 11 percent to 12 percent in January 2025.

"Is it really the right time to raise? That's it," he said again.

The 12 percent increase in VAT is one of the government's tax adjustments plans regulated in Law Number 7 of 2021 concerning Harmonization of Tax Regulations (UU HPP).

In the HPP Law, it is stated that based on Article 7 paragraph 1 of the HPP Law, the previous VAT rate of 10 percent was changed to 11 percent which was in effect on April 1, 2022, and again increased by 12 percent no later than January 1, 2025.

In Article 7 paragraph 3, the VAT rate can be changed to a minimum of 5 percent and a maximum of 15 percent. However, said Coordinating Minister for the Economy Airlangga Hartarto, the adjustment of the regulation depends on the next government policy.