The Increase VAT Percentage will Apply to Luxury Goods : Indonesian President Prabowo

With the vision of widening the economy of Indonesia, the President Prabowo Subianto has announced the increase in VAT (Value Added Tax) for the luxury goods and services from 11 percent to 12 percent. This will come into effect from January 1, 2025. This selective hike will target the population who can pay this tax for their luxury products/things like private jets, yachts, luxury homes and more. It does not apply on cooking oil which is sold under a government programme, sugar, and wheat flour.

The government of President Prabowo has implemented this hike in VAT based on the tax reforms of Indonesia which allows the government to gradually increase the VAT rates, Number 7 of 2021 on Tax Regulation Harmonization. 

With this new announcement of the President the previously declared statement of finance ministry officials in December has been reversed back. President Prabowo assured that the planned support measures will soften the blow from the VAT hike which is worth 38.6 trillion rupiah including the electricity discounts and other tax breaks($2.40 billion).

“Today, the Government has decided that the increase of VAT rate from 11% to 12% will apply only to luxury goods and services that are the subject of luxury sales tax and are consumed by those with higher income, such as private jets, yachts and luxury homes” said Indonesian President

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