VAT 12 Percent For Luxury Goods, Deputy Kadin: Maintain People's Purchasing Power

Deputy Chairperson of the Coordinator for Organization, Law and Communication of the Indonesian Chamber of Commerce and Industry, Yukki Nugrahawan Hanafi (left). (Photo: ANTARA)

JAKARTA - Deputy Chairperson of the Coordinator for Organization, Law and Communication of the Indonesian Chamber of Commerce and Industry (Kadin), Yukki Nugrahawan Hanafi, said that the implementation of a 12 percent Value Added Tax (VAT) rate only applies to luxury goods and services. is the government's effort to maintain people's purchasing power.

Yukki said, as a representative organization for the national business world, the Indonesian Chamber of Commerce and Industry welcomed the implementation of the 12 percent VAT rate which would only be applied to luxury goods groups.

This is to ensure that the 11 percent VAT rate still applies to goods/services that do not include luxury goods and 0 percent VAT for basic goods.

"We see this as a good effort for the government to maintain purchasing power and domestic consumption, where more than the source of national economic growth is generated through the public consumption sector," said Yukki as quoted by ANTARA, Wednesday, January 1.

According to Yukki, this policy is also one of the government's efforts to address external economic factors that are full of uncertainty in 2025, particularly with the potential for an increase in the tension of the US and Chinese tariff wars, an escalation of geopolitical conflicts, and the impact of the Fed's high-interest era which is still ongoing.

He said the business world sees that this government policy is an important effort to maintain domestic economic stability and resilience.

On the other hand, the Indonesian Chamber of Commerce and Industry appreciates the government's ongoing incentives for the business sector and the community, this incentive not only supports domestic consumption, but also provides a significant impetus for strategic sectors, including micro, small and medium enterprises (MSMEs) which are the main pillars of the national economy.

"We hope that the business world, especially the manufacturing sector and MSMEs, can revive with domestic consumption and incentives provided by the government," he also said.

Mariki believes that the economic growth target above 5 percent can be achieved in 2025, provided that there is a strong synergy between the government and the business world.

Steps such as increasing investment, supply chain efficiency, and strengthening the productive sector, said Yukki, will be the key to maintaining economic stability and growth.