Thomas Says VAT Certainty Rises To 12 Percent In 2025 After The Transition Of Government Substitution

Deputy Minister of Finance Thomas Djiwandono (Photo: Doc. VOI)

SERANG - Deputy Minister of Finance II Thomas Djiwandono opened his voice regarding the adjustment of the Value Added Tax (VAT) rate to 12 percent in 2025 which is mandated in the Law on Harmonization of Tax Regulations (UU HPP).

According to Thomas, the adjustment of the increase in VAT rates from 11 percent to 12 percent can only be ascertained after the completion of the transition from the Joko Widodo administration to the Prabowo Subianto government.

"Give Mr. Prabowo to become president first. These are matters relating to his decision from President Prabowo and his cabinet," Thomas said in the media gathering of the Ministry of Finance 2024, Wednesday, September 25.

According to Thomas, the plan to increase VAT to 12 percent has been known by President-elect Prabowo Subianto and this will be discussed and answered after the next cabinet is formed.

"The important thing for the elected president has been informed about this. And there will certainly be further explanations if there is a cabinet that has been formed," he said.

Previously, Chairman of the DPR RI Budget Agency (Banggar) Said Abdullah estimated that the decision to raise or not the Value Added Tax (VAT) rate to 12 percent should be discussed again in the first quarter of 2025.

"According to my estimate, it would be better if it went up and the increase would not be discussed later in the first quarter of 2025," he told the media crew, Thursday, September 19.

According to Said, although the VAT rate increase policy has been regulated in Law Number 7 of 2021 concerning Harmonization of Tax Regulations (HPP), it must still adjust to the current and next year purchasing power of the people.

"We'll see in the future whether this VAT is 11 percent or 12 percent because of what? It's not immediately, even though the HPP law is valid in 2025. But let's also calculate what people's purchasing power will be next year," he said.

Therefore, Said added that the government needs to take into account the impact of increasing VAT to 12 percent on labor income so as not to interfere with economic growth.

"Then at the same time the impact on our labor income must be calculated all," he said.

Said said that it was not related to the increase or not in VAT rates but rather considering efforts or best efforts that the government could make next year in pursuing the 2025 tax revenue target of IDR 2,490.9 trillion.

"The assumption is not to use 11 percent or 12 percent, that there is a best effort that must be carried out by the government, in this case tax revenues of Rp2,490 trillion, then excise duty, import duties and export duties of around Rp. 300 trillion something," he explained.

Said thus emphasized that the decision to increase VAT rates next year will be part of the new government policy.

"That in the middle of the road, the new government will think that it needs to be increased or not 1 percent from 11 percent to 12 percent, it has become a new government policy that will come," concluded Said.

As is known, the increase in VAT rates to 12 percent in 2025 has been regulated by the government through Law Number 7 of 2021 concerning Harmonization of Tax Regulations (HPP).

Article 7 of the regulation states that the VAT rate is 11 percent which will take effect on April 1, 2022 and 12 percent which will take effect no later than January 1, 2025.