Spokesperson For The Ministry Of Industry: Every 1 Percent Increase In VAT Will Have An Impact On All Industrial Sectors

Spokesperson for the Ministry of Industry Febri Hendri Antoni Arif (Photo: Theresia Agatha/VOI)

Spokesperson for the Ministry of Industry (Kemenperin) Febri Hendri Antoni Arif said, every 1 percent increase in Value Added Tax (VAT) would have an impact on utilization, aka industrial installed production capacity.

Febri does not deny that the impact of the increase in tax rates will also hit all industrial sectors.

"The increase in 1 percent of VAT certainly has a huge impact on industrial utilization. All sectors are affected. Likewise, all are affected. All are affected," said Febri when met by reporters at his office, quoted Friday, November 22.

However, Febri realized that the adjustment of the VAT rate to 12 percent was intended by the government to increase state revenue, which in 2025 is targeted at IDR 3,005.13 trillion. This figure is up from the original draft of IDR 2,996.9 trillion.

Therefore, he also asked the industry to understand the 12 percent increase in VAT which has been knocked by the government.

"Yes, it must also be seen. The government, right, has a revenue target of a certain percentage, yes. The APBN revenue target, yes, must be understood as well," he said.

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

The 12 percent VAT discourse is contained in the Tax Regulation Harmonization Law (HPP) which was prepared in 2021. At that time, the government considered health conditions to the basic needs of the community which were affected by the COVID-19 pandemic.

"This means that when we make policies regarding taxation, including this VAT, it is not done blindly and as if we have no affirmation or attention to other sectors, such as health and even at that time including staple foods," said Sri Mulyani.