The government plans to change the value added tax (VAT) policy next year. The reason, according to the Ministry of Finance, is that the consumption portion of the middle class continues to increase consistently from 21% in 2002 to 47% in 2018.
Based on the Macroeconomic Framework Book and the Principles of Fiscal Policy in 2022, there are two main points of plan for important changes in VAT policy, namely reducing various facilities and implementing multi-tariffs. The reduction of the VAT facility will be applied either in the form of exemption or treatment as Non-Taxable Goods (BKP) or Non-Taxable Services (JKP).
According to the report, the VAT exemption so far has distorted the competitiveness of local products. “In addition, there are indications of VAT facilities that are not on target and have the potential to erode taxation bases or reduce tax revenues,” reads the book which was released on Friday (21/5).
Source Katadata
