Officially, Here Is The List Of Goods And Services That Will Be Subject To A 12 Percent VAT Starting January 1, 2025

The government will officially implement a 12 percent value-added tax (VAT) starting January 1, 2025, in accordance with Law Number 7 of 2021 on Tax Regulation Harmonization. This was announced by the Coordinating Minister for Economic Affairs, Airlangga Hartarto, during a press conference on the Economic Stimulus Package for Welfare at the Ministry of Economic Affairs building in Jakarta on Monday, December 16, 2024. "As mandated by the HPP Law, the VAT rate will increase to 12 percent from January 1 next year," Airlangga stated, as reported in a live broadcast on the YouTube channel of the Indonesian Ministry of Economic Affairs. So, what goods and services will officially be subject to the 12 percent VAT starting January 1, 2025?

In the same event, Finance Minister Sri Mulyani Indrawati revealed that the government will apply the 12 percent VAT increase specifically to luxury goods and services. She noted that these luxury items are consumed by the wealthiest individuals with higher spending, falling into the top 20 percent income bracket. "We will identify the price categories of goods and services that fall under this premium classification," she explained during the press conference. The luxury goods and services that will be subject to the 12 percent VAT starting January 1, 2025, include: VIP hospitals or other premium healthcare services, expensive international standard education or other premium educational services, electricity for households with a capacity of 3600-6600 VA, premium rice, premium fruits, premium fish like salmon and tuna, premium shrimp and crustaceans like king crab, and premium meats such as wagyu or kobe, which can cost millions.

On the other hand, Sri Mulyani mentioned that there are items that are technically subject to the 12 percent VAT, but the government will only apply an 11 percent rate. "These items are subject to VAT, but since we consider them essential for the public, we have decided to keep their VAT at 11 percent," she clarified.

This category includes wheat flour and sugar for industry, as well as bulk cooking oil under the Minyakita brand. The government will cover the 1 percent increase in VAT on these items. Additionally, there is a 12 percent VAT exemption for essential goods, basic necessities, and important items. The basic necessities exempt from VAT include rice, broiler chicken, beef, milkfish, skipjack tuna, mackerel, yellowfin tuna, eggs, green chili, red chili, bird's eye chili, shallots, and granulated sugar. Furthermore, some strategic services also benefit from the 12 percent VAT exemption. These services include education, medical healthcare, social services, public transportation, financial services, and rental of public housing and general homes.

Tag: Airlangga Hartarto VAT