President Prabowo Announces VAT Increase to 12 Pct. Only for Luxury Goods to Take Place on January 1, 2025

Author: Dian Kencana
January 6, 2025

President Prabowo Subianto gives a press statement at the Ministry of Finance in Jakarta, Tuesday. (31/12/2024). (ANTARA/Mentari Dwi Gayati)

SEAToday.com, Jakarta - Indonesian President Prabowo Subianto officially announced that the value-added tax (VAT) increase from 11 percent to 12 percent on January 1, 2025 will only apply to luxury goods and services. This was announced after attending a meeting at the Finance Ministry office on Tuesday (12/31), which was held to finalize the 2024 State Budget and launch the Core Tax.

“The gradual increase in tariffs is carried out from 10 percent, to 11 percent in April 2022, this has already been implemented. Then as ordered by law, 11 to 12 percent on January 1, 2025, tomorrow. This gradual increase is intended to avoid a significant impact on people's purchasing power, inflation and economic growth,” President Prabowo told a press conference at the Ministry of Finance in Jakarta.

Furthermore, Finance Minister Sri Mulyani stated on Instagram (@smindrawati) on Tuesday (12/31) that the VAT policy is in line with the mandate of the Harmonization of Tax Regulations Law 7/2021.

Minister Sri Mulyani further explained that the goods and services subject to 12% VAT are luxury goods, such as private aircrafts, yachts, houses/apartments/condominiums with prices above IDR 30 billion, and luxury motor vehicles. Goods and services that have been VAT-free will remain VAT-free, and those subject to 11% VAT will still be subjected to that figure.