Kadin: Increased VAT To 12 Percent With A Psychological Impact On The Economy In The Regions

Illustration. (Photo: Doc. Antara)

JAKARTA - Deputy Chairperson of the Indonesian Chamber of Commerce and Industry (Kadin) North Sulawesi (Sulut) Ivanry Matu said the increase in VAT to 12 percent could have a psychological impact on the economy in the regions.

"The president has informed that the increase in VAT is 12 percent, only applies to certain luxury goods," said Ivanry, in Manado, quoted by Antara, Friday, January 10.

Ivanry said that because the increase in VAT had been stated in the law that had been decided since 2021 regarding the gradual increase, it had to be implemented.

"But we must appreciate the steps taken by the government, even though it only applies to luxury goods, but overall it will have a psychological impact on the economy," he said.

This will certainly also affect micro, small and medium enterprises (MSMEs),

such as public perceptions that are formed and think that goods will rise and have an impact on all sectors.

This public perception can have an impact on purchasing power, saving family spending, spending on a priority scale.

He said all of this would have an impact on reducing turnover for SMEs, while SMEs had routine operational costs and if turnover was no longer comparable to spending, it would threaten businesses to close, other impacts of no tax payments and PAD.

Minister of Finance (Menkeu) Sri Mulyani Indrawati has issued Minister of Finance Regulation (PMK) Number 131 of 2024 which regulates treatment related to the application of Value Added Tax (VAT) as well as the basis for implementing 12 percent VAT.

In a copy of PMK, it is stated that PMK 131 of 2024 is PMK on the Application of Value Added Tax on Imports of Taxable Goods, Submission of Taxable Goods, Submission of Taxable Services, Utilization of Intangible Taxable Goods from Outside the Customs Area within the Customs Area, and Utilization of Taxable Services from Outside the Customs Area within the Customs Area.

This Ministerial Regulation comes into effect on January 1, 2025.