Sri Mulyani Says 12 Percent VAT Increase Next Year Will Be Handed Over To The Prabowo-Gibran Government

President and Vice President Elect Prabowo Subianto and Gibran Rakabuming Raka. (Photo: Doc. ANTARA)

Minister of Finance Sri Mulyani Indrawati opened her voice regarding the plan to increase the value added tax rate (VAT) from 11 to 12 percent in 2025.

He handed over the policy to the Prabowo Subianto-Gibran Rakabuming Raka government

"The 12 percent (VAT rate) is for next year we will certainly leave it to the new government," Sri Mulyani said in a meeting with Committee IV of the Indonesian Regional Representative Council (DPD), Tuesday, June 11.

Sri Mulyani said that the increase in VAT rates had been stated in Law Number 7 of 2021 concerning Harmonization and Tax Regulations (UU HPP), where VAT 12 percent would be enforced no later than January 2025.

The provision continues to increase the VAT rate by 11 percent which has been carried out since April 2022.

"The law did divide it into two stages of increase," he said.

He conveyed that there were several considerations by the government in determining the VAT tariff in the law, namely to maintain the economy and increase state revenue.

According to him, the government also pays attention to the conditions of the subject of VAT, in this case, private people or business entities to maintain the momentum of national economic growth and increase the level of state revenue for the increasing need for state spending.

"In this case, we understand the conditions of the company and of course it will be determined later. On the one hand, the desire to protect our economy, growth and moments can still be maintained. On the other hand, there is a need to increase state revenue, especially after a very large increase in spending during the pandemic," he said.

For information, even though it has been regulated in the HPP Law, the government can still postpone the increase in VAT rates to 12 percent with certain considerations. Referring to Article 7 paragraph (3), the VAT rate can be changed to a minimum of 5 percent and a maximum of 15 percent.