Government Commits to Increasing VAT Rate to 12% by 2025

JAKARTA. The government ensures that the Value Added Tax (VAT) rate will increase to 12% in 2025, as planned by the government in Law (UU) Number 7 of 2021 concerning Harmonization of Tax Regulations (HPP).

Quoting Kontan.co.id, this was conveyed by the Coordinating Minister for Economic Affairs Airlangga Hartarto, as a form of certainty for the continuation of President Joko Widodo's programs and policies by the upcoming new government.

Furthermore, the tariff determination is planned to be accommodated in the State Budget Draft (RAPBN) for 2025 which will soon be prepared by the government.

"The preparation of the State Budget will be detailed in the next 1 month, of course in the next 1 month there will be a KPU(General Elections Commission of Indonesia) decision on 20 March, the 2025 State Budget will be implemented by the next government," said Airlangga, Friday (8/3).

Previously, in the HPP Law, the increase in VAT rates from the current 11% to 12% could be done no later than 1 January 2025.

The previous 11% rate has been in effect since 2022 when the government raised it from 10%. This is also part of the mandate of the HPP Law.