Sri Mulyani: VAT Will Not Increase

Finance Minister Sri Mulyani Indrawati has confirmed that the value-added tax (VAT) rate will not increase for most goods and services. The government has decided that the 12 percent VAT rate, effective from January 1, 2025, will only apply to luxury items such as yachts, private jets, and luxury residences valued over Rp 30 billion. Sri Mulyani shared this information on her personal Instagram account, @smindrawati. She stated that all goods and services currently subject to the 11 percent VAT will not see any changes in their rates. This includes items like soap, shampoo, toothpaste, skincare products, and digital streaming services like Netflix and Spotify. "VAT WILL NOT INCREASE…!" she wrote, as quoted on Wednesday (January 1, 2025). This statement addresses public concerns about the potential increase in the VAT rate from 11 percent to 12 percent, which has been a hot topic in recent months. Sri Mulyani clarified that the 12 percent VAT will only apply to luxury goods that are currently subject to the Luxury Goods Sales Tax (PPnBM), as outlined in Minister of Finance Regulations (PMK) Number 15 of 2023 and PMK Number 42 of 2022. "This includes private jets, yachts, luxury homes/apartments/condominiums priced above Rp 30 billion, and luxury vehicles," she explained. Meanwhile, all goods and services that currently enjoy VAT exemptions will continue to have a zero percent VAT rate in accordance with Government Regulation (PP) Number 49 of 2022.

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