The Government Officially Applies 12 Percent VAT In 2025, Except For Basic Food Materials

The Press Conference regarding the increase in VAT to 12 Percent (Photo: Aris Nurjani/VOI)

JAKARTA - The government officially implemented a Value Added Tax (VAT) of 12 percent on January 1, 2025.

Coordinating Minister for Economic Affairs Airlangga Hartarto conveyed that in accordance with the mandate of the Law on Harmonization of Tax Regulations (UU HPP) according to a schedule that has been determined that the VAT rate will increase by 12 percent as of January 1, 2025.

"Next year's VAT will increase by 12 percent as of January 1 but the goods needed by the community are given facilities or 0 percent," he said at a press conference on the Economic Stimulus Package for Welfare, Monday, December 16.

Airlangga said that the groups of goods exempted from VAT are basic necessities such as rice, meat, eggs, fish and milk. Likewise with education, health, financial services, labor, insurance and water.

Airlangga emphasized that in maintaining the purchasing power of the government community, it will continue to provide economic policy stimulus for low-income households, namely that the VAT rate will be borne by the government by 1 percent for basic goods so that it will still be subject to 11 percent.

Meanwhile, the basic goods that will be subject to the VAT rate are 11 percent, namely cooking oil with Oilita packaging, wheat flour and industrial sugar.

"Minya Kita, used to be bulk oil, it was given 1 percent assistance, so it didn't go up to 12 percent. Then wheat flour and industrial sugar, so each of them was given 1 percent which was 1 percent borne by the government," he said.

Airlangga said this stimulus was given to maintain people's purchasing power, especially for basic needs and specifically industrial sugar which supports the food and beverage processing industry, which has a fairly high role.

Airlangga said the government also implemented exceptions to several VAT objects such as:

- Basic necessities: rice, grain, corn, sago, soybeans, salt, meat-Eggs, milk, fruits, vegetables, and sugar consumption-Health services, education services, social services, insurance services, financial services, public transport services, and labor- Vaccines services, textbooks and holy water- clean water (including continued/pair fees and fixed expense)- Electricity (except for households with >6600 VA power)= simple flats, flats, hospitals, and construction services for houses of worship and construction services for national disasters- Machines, fisheries marine products, livestock/feets, feedstock, feed materials, jarat and raw skin, raw materials for silver-Oil handicrafts, natural gas (gas through pipelines, LNG and CNG) and geothermal earth-gold bullion and granula-arma/alutsista and air photowear.