Government Reveals List Of Luxury Goods Affected By VAT 12 Percent Enough Regulated In PP

Tax (Photo: dock. Unsplash)

JAKARTA - Secretary of the Coordinating Ministry for Economic Affairs Susiwijono Moegiarso explained that the 12 percent increase in Value Added Tax (VAT) in 2025 for luxury goods does not need to revise the Law on Harmonization of Tax Regulations (HPP) is quite regulated through Government Regulations (PP).

To note, the increase policy is contained in Law Number 7 of 2021 concerning Harmonization of Tax Regulations (UU HPP) in Article 7 paragraph (1), the 12 percent VAT rate is valid no later than January 1, 2025, after the increase in VAT rates from 10 percent to 11 percent in April 2022.

In addition, Susi explained that the 12 percent increase in VAT in 2025 was only applied to luxury goods that had been regulated in the Luxury Goods Sales Tax (PPnBM).

Therefore, Susi said that the regulation regarding the increase in VAT rates by 12 percent for luxury goods next year is quite regulated in Government Regulations, considering that in PP 49/2022 details on Taxable Goods (BKP) and Taxable Services (JKP) have been regulated which are exempt from the determination of VAT.

"Yes, of course, if we need to change the PP, we will definitely revise it, there will be PP 49/2022 with exemption from VAT, maybe if we get there we will coordinate it later," he said after the Indonesia SEZ Business Forum 2024 event, Monday, December 9.

However, Susi said that she had not been able to provide detailed information regarding the type of luxury goods that would be subject to an increase in VAT of 12 percent by 2025 because the authority was with the Ministry of Finance.

"Well, those friends of the Ministry of Finance were assigned by Mr. Dasco to arrange it," he explained.

Previously, President Prabowo Subianto said that he would continue to increase the VAT rate to 12 percent in 2025, which would be specifically for luxury goods products.

"VAT is a law, yes we will implement it, but selective. Only for luxury goods," he said when giving a press statement, Friday, December 6.

Based on the information listed on the official website of the Ministry of Finance, the following is a list of luxury goods subject to the Sales Tax on Luxury Goods (PPnBM) tariff in accordance with PP No. 61 of 2020.

1. Motorized vehicles, except for ambulances, hearse vehicles, fire engines, detention vehicles, public transportation vehicles, and state interests.

2. Luxury residential groups such as luxury homes, apartments, condominiums, totan houses, and the like.

3. Aircraft groups, except for state or commercial air transportation purposes

4. Air balloon group.

5. Groups of firearms and other firearms, except for state purposes.

6. Luxury cruise ship groups, except for the benefit of the state, public transportation or tourism businesses.