The 12 Percent VAT Increase For Luxury Goods Can Complicated The Tax Climate

Tax illustration (photo: Unsplash)

JAKARTA - Economist of Paramadina University Wijayanto Samirin revealed that the plan to increase Value Added Tax (VAT) to 12 percent in 2025 which is only applied to luxury goods seems to be a middle way solution for the government.

However, he considered that the policy of increasing Value Added Tax (VAT) to 12 percent in 2025 had the potential to make Indonesia's tax climate more complicated and would increase complexity in the existing tax system.

"Receipts of the state and people's purchasing power are also not affected but our tax climate will be more complicated," he explained in his statement, Friday, December 6.

According to Wijayanto, although the policy will not have much effect on state revenue and people's purchasing power, it is better if the decision to increase VAT to 12 percent by 2025 can be postponed.

"Instead of making this decision, it is better if the increase in VAT to 12 percent is postponed, it is carried out when people's purchasing power starts to improve, maybe in the middle of 2025, or early 2026," he said.

Previously, the Chairman of Commission XI of the DPR RI, Mukhamad Misbakhun, revealed that the plan to increase the Value Added Tax (VAT) rate by 12 percent on January 1, 2025, will continue to be carried out based on the results of discussions with President Prabowo Subianto.

"As a result of our discussion with the President, we will continue to follow the law that VAT will continue to run according to the schedule of the mandate in the law, namely January 1, 2025," he explained after discussing with Prabowo at the State Palace, Tuesday, December 5.

Misbakhun said that the implementation of the VAT tariff of 12 in 2025 would be carried out selectively, namely targeting luxury goods.

"Selective to several communities, both domestic and imported goods related to luxury goods. So that the government only provides that burden to consumers who buy luxury goods," he said.

According to Misbakhun, small communities do not need to worry about the increase in VAT by 12 percent in 2025 because for small communities it remains at the current VAT rate.

Misbakhun said that the government will also review the non-single VAT tariff policy so that VAT will not be in one tariff and will be adjusted to the class of each commodity.

"So that it will no longer apply, the government plans are still being studied, carried out in a more in-depth study, that VAT will not be in one tariff, not in one tariff and this will still be studied later," he said.

Misbakhun also asked the public not to worry because the scope of basic goods needs, then education services, health services, then banking services related to matters of general service, government services, is still not used by VAT.

"Mr. President is also trying to bring order to many matters related to illegal matters, so that it will increase state revenues that have not been detected so far," he added.