Entrepreneurs Ask The Government To Postpone The Increase In VAT To 12 Percent

Rupiah (Photo: Antara)

JAKARTA The HIPMI Tax Center Autonomous Agency (Banom) BPP HIPMI firmly requested that the government's plan to increase the Value Added Tax Rate (VAT) to 12 percent be postponed.

It is known that the Government will increase VAT 12 percent in 2025 in line with Law Number 7 of 2022 concerning Harmonization of Tax Regulations.

The Law on Harmonization of Tax Regulations Article 7 states that the VAT rate of 11 percent is valid on April 1, 2022. Meanwhile, the VAT rate of 12 percent will take effect no later than January 1, 2025.

Chairman of the Banom HIPMI Tax Center M. Arif R. Said Putra stated that this policy is considered to have a significant negative impact on business actors, especially Micro, Small and Medium Enterprises (MSMEs) who are still struggling to recover from the impact of the pandemic. In addition, the increase in VAT will increase the operational cost burden and reduce people's purchasing power.

On the other hand, Arif conveyed that HIPMI understands that the government needs to find a source of income for the state budget but increasing VAT is not the right solution in the midst of economic conditions that are still vulnerable.

"We urge the government to reconsider this policy and look for other alternatives that are more friendly to the business world and the community, for example by imposing a carbon tax and taxing nickel derivative products," he said in his statement, quoted Friday, July 12.

Arif added that the room to postpone the increase in VAT was very wide open considering that in Article 7 paragraph 4 of the Law on Harmonization of Tax Regulations (HPP).

"So we have a position, paying attention to the government, especially the things that were mentioned earlier, such as a weakened exchange rate, then relatively high food inflation and the rupiah exchange rate which continues to weaken. This is expected to be a concern for the government," he said.

In addition, Arif conveyed that with the transition of government leadership from President Joko Widodo to President-elect Prabowo Subianto, business actors requested that the 12 percent VAT increase plan not be implemented immediately in early 2025.

"The leadership transition also has an element of uncertainty, yesterday we talked about the Tax Ratio, there must be an increase in the current government's incompatibility with the future government transition team," he said.