12 Percent VAT Increase In 2025, Prabowo-Gibran Synchronization Task Force Team Reveals Still Under Coordination

Member of the Finance Division of the Prabowo-Gibran Synchronization Task Force Team, Thomas Djiwandono (third from the left). (Photo: Aris Nurjani / VOI)

JAKARTA - Member of the Finance Division of the Prabowo-Gibran Synchronization Task Force Team, Thomas Djiwandono, opened his voice regarding the 12 percent increase in Value Added Tax (VAT) in 2025, which is still in further coordination.

"Everything will be coordinated as I said," said Thomas after the press conference on the latest economic fundamental conditions and the 2025 State Budget plan, Monday, June 24.

Meanwhile, Minister of Finance (Menkeu) Sri Mulyani Indrawati emphasized that the plan to increase VAT of 12 percent will fully be submitted to the elected President and Elected Vice President, Prabowo Subianto and Gibran Rakabuming Raka.

"Regarding VAT, I have conveyed it, once again I leave it to the new government to decide," he said.

Previously, 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 in a meeting with Committee IV of the Indonesian Regional Representative Council (DPD), Tuesday, June 11.

Sri Mulyani said 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 Sri Mulyani, 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.