Association: 12 Percent VAT Will Have An Impact On The Sustainability Of MSMEs

Illustration. (Photo: Doc. Antara)

JAKARTA - Secretary General of the Indonesian MSME Association (Akumindo) Edy Misero said the increase in value added tax (VAT) to 12 percent would have an impact on the sustainability of MSMEs in the midst of the economy which is still recovering.

Seeing that the current economic condition is still not fully recovered and has decreased purchasing power, this 1 percent additional tax burden is considered to be even more burdensome for MSME actors.

"Because economic conditions and people whose income has not returned to normal, this 1 percent additional will increase the burden," he said, quoted from Antara, Thursday, November 21.

Edy said that the government should focus on making policies that are oriented towards sustainability and development of the MSME sector, one of which is through increasing government spending and SOEs for MSME products.

"And how can we jointly encourage MSME players to increase their production from for example 1,000 pieces to 2,000 pieces in a month," he said.

The plan to increase VAT 12 percent in January 2025 was previously also criticized by Deputy Chairman of Commission VII DPR Evita Nursanty. According to him, the policy will have an impact on MSMEs, which rely heavily on the stability of people's purchasing power.

He reminded that if VAT increases, the price of goods and services will also increase, which will then have an impact on people's purchasing power.

If purchasing power decreases, it is certain that sales of MSME products will also decrease along with the increase in selling prices.

"Instead of increasing VAT, the government can optimize other sources of income through improvements to a more effective tax system," said Evita.

Previously, Minister of Finance Sri Mulyani Indrawati stated that the plan to increase the VAT rate to 12 percent on January 1, 2025 would still be carried out according to the mandate of the Law.

He said the state budget (APBN) must be managed properly in order to stay healthy, but also must be flexible enough to be able to respond to various crisis situations that may occur.