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The Government Will Raise VAT Rates To 12 Percent

Unofficial translation

REPUBLIKA.CO.ID,  JAKARTA — The government plans to increase the rate of value added tax (VAT) from 10 percent to 12 percent. This will be stated through the revision of Law Number 6 of 1983 concerning General Provisions of Taxation (KUP).

“The rate of value added tax is 12 percent,” Article 7 reads as quoted on Tuesday (8/6).

However, paragraph (3) of the Article explains that the VAT rate of 12 percent can be changed to a minimum of 5 percent to a maximum of 15 percent.

“Changes in the rate of Value Added Tax as referred to in paragraph (3) shall be regulated by a Government Regulation …,” writes paragraph (4) of Article 7.

Furthermore, the government added a new article, namely Article 7A which explains that VAT may be subject to different rates depending on the type of goods/services such as delivery of certain taxable goods/services, import of certain taxable goods, utilization of certain intangible taxable goods, and utilization of certain taxable services. certain taxes from outside/in the customs area.

“The different tariffs as intended are subject to a minimum of five percent and a maximum of 25 percent,” writes paragraph (2) of Article 7A. 

Previously, the Special Staff of the Minister of Finance for Strategic Communication, Yustinus Prastowo, said that the planned VAT rate increase would not be implemented in the near future. This is because aggressive tax withdrawals are considered inappropriate in the midst of the economic recovery process from the impact of the Covid-19 pandemic, and the tax incentive stimulus is still continuing.

“We are making a policy umbrella whose implementation may take one to two years. But, we are preparing it now, while we have the opportunity,” he said during the Virtual Recovering Towards National Awakening event which was held by Infobank, Thursday (3/6).

According to him, the plan aims to provide targeted facilities. Later, the VAT on goods needed by the public could be reduced to five or seven percent, which was initially charged at 10 percent.

Conversely, goods that are not needed by many people, but are consumed by the upper class and are limited in nature, can be subject to higher taxes. “We want to provide facilities that are right on target, we actually want to provide support for public access to needed goods,” he said.

Source republika.co.id

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