This Is The Fiscal Incentive Stimulus In 2025 Reduces The Impact Of 12 Percent VAT

Press Conference on VAT 12 Percent (Photo: Theresia Agatha/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 said that in maintaining the purchasing power of the government community, it will continue to provide economic policy stimulus for low-income households.

Airlangga conveyed that the first policy stimulus was 1 percent of VAT incentives borne by the government, or only 11 percent was charged. The basic goods that are still subject to an 11 percent tariff are cooking oil with Oil, wheat flour and industrial sugar packaging.

"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 at a press conference on the Economic Stimulus Package for Welfare, Monday, December 16.

Then, providing food and rice assistance for desil 1 and 2 is 10 kg per month.

Furthermore, to reduce household expenses, electricity installed below or up to 2200 volt ampere (VA) is given a discount fee of 50 percent for 2 months.

Next up is the stimulus for the middle class, Airlangga said that VAT is borne by the government for the property sector to buy a maximum house of IDR 2 billion with a selling price of up to IDR 5 billion. The incentive is carried out with a discount scheme of 100 percent from January to June 2025, and a discount of 50 percent for July to December 2025.

Furthermore, VAT is borne by the government for automotive purposes. Airlangga explained that the provision of VAT DTP incentives for battery-based motor vehicles (EVs) is 10 percent for the delivery of certain four-wheeled EVs and certain EV buses with a minimum TKDN value of 40 percent and 5 percent for the delivery of certain EV buses with a minimum TKDN value of 20 percent to less than 40 percent.

Then the provision of an incentive for Sales Tax on Luxury Goods (PPnBM) with an incentive amount of 100 percent for imports of certain four-wheeled Battery-Based Electric Motor Vehicles (KBLBB) completely and the delivery of certain four-wheeled KBLBBs originating from domestic production or completely knock down (CKD). Furthermore, the provision of PPnBM DTP incentives for hybrid motorized vehicles is 3 percent. As well as the provision of incentives for exemption of CBU EV Imports by 0 percent.

Furthermore, the provision of income tax incentives (PPh) 21 is borne by the government for labor-intensive sector workers with a salary of up to IDR 10 million per month.

Then support for workers who experience layoffs is given the convenience of accessing job loss guarantees and pre-employment cards. Also, the government provides a 60 percent discount on work accident insurance contributions for 6 months.

"This means that BPJS will create an easier mechanism, so that the change is that the claim period can be extended to 6 months, and the benefits are 60 percent for 6 months," he explained.

Then the stimulus for MSMEs, entrepreneurs, and industries in the form of extending the validity period of the final income tax to 0.5 percent from turnover to 2025 through the revision of government regulations. As well as the MSME threshold, it fell from IDR 4.8 billion to IDR 3.6 billion.

Furthermore, the government will also provide incentives in the form of exemption from PPh for MSMEs with turnover below Rp. 500 million per year. Finally, there will be a labor-intensive industry financing scheme in the form of providing a 50 percent discount for 6 months.

"For this labor-intensive industry, new facilities, the government provides subsidies for investment loans to revitalize machinery for labor-intensive industries, textiles, or footwear, regardless of the government's 50 percent subsidy. This is part of the subsidy ceiling in KUR," he explained.