VAT 12 Percent Special For Luxury Goods, Prabowo: Does Not Have A Significant Impact On People's Purchasing Power

President Prabowo Subianto. (Photo: Aris Nurjani/VOI)

JAKARTA - President Prabowo Subianto emphasized that the goal of increasing the Value Added Tax (VAT) rate from 11 percent to 12 percent in 2025 was carried out in stages so as not to have a significant impact on people's purchasing power, inflation, and economic growth.

"This gradual increase is intended so as not to have a significant impact on people's purchasing power, on inflation and on economic growth," he explained at a press conference, Tuesday, December 31.

Prabowo believes that every tax policy must always prioritize the interests of the people as a whole, protect people's purchasing power, and encourage economic equality.

"Our commitment is to always side with the people, side with the national interests, and strive to work for the welfare of the people," he said.

Therefore, Prabowo said that he had coordinated with the DPR RI and decided that the increase in VAT rates from 11 percent to 12 percent specifically for luxury goods and services.

"The increase in VAT rates from 11 percent to 12 percent is only imposed on luxury goods and services, namely certain goods and services that have been affected by VAT on luxury goods (Sales Tax on Luxury Goods or PPNBM)," he said.

Prabowo gave an example of luxury goods subject to a tariff of 12 percent, namely goods and services consumed by the community, such as private jets, cruise ships or yachts, and luxury houses that are valued far above the middle class.

"This means that for goods and services that are not classified as luxury goods, there is no increase in VAT, which is still as big as it is now, which has been in effect since 2022," he said.

In addition, Prabowo conveyed that goods and services, which are the basic needs of the community, which have been given exemption facilities or subject to a 0 percent VAT rate, still apply.

"For goods and services, which are the basic needs of the community who have been given exemption facilities or subject to a 0 percent VAT rate, it is still valid. I repeat, goods and services which are the basic needs of the community who have been given tax exemption facilities, namely 0 percent VAT is still valid," he said.