Finance Minister Affirms VAT Increase to 12 Pct. Starting January 2025

Author: Dian Kencana
November 14, 2024

Finance Minister Sri Mulyani Indrawati (center) with Deputy Finance Minister Anggito Abimanyu (left), Suahasil Nazara (second left), Thomas A. M. Djiwandono (second right), and Secretary General Heru Pambudi (right) during a presentation at a working meeting with Commission XI of the House of Representatives at the Parliament complex, Senayan, Jakarta, Wednesday (13/11/2024). (ANTARA)

SEAToday.com, Jakarta - Finance Minister Sri Mulyani expressed her ministry's readiness to implement an increase in the Value Added Tax (VAT) rate from 11 percent to 12 percent. She shared this during a working meeting with Commission XI of the Indonesian House of Representatives (DPR RI) on Wednesday (11/13).

In response to a question from one of the DPR members, Minister Sri Mulyani confirmed that the implementation of the new tax rate would follow existing laws and require thorough preparation.

“We have discussed this together, and the law is already in place. We need to ensure it can be implemented with clear communication,” explained Sri Mulyani.

She also mentioned that, despite the increase, the government is preparing several tax exemption or reduction facilities. Therefore, Minister Sri Mulyani emphasized the need to provide explanations to the public.

“We need to communicate extensively to the public. Although we are implementing tax policies, including VAT, (it is) not done blindly or without affirmative action,” she stated.

According to Law No. 7 of 2021 on the Harmonization of Tax Regulations (UU HPP), the 12 percent VAT rate must be implemented no later than January 1, 2025. This increase marks the second stage following the rise from 10 percent to 11 percent in April 2022.