Rising VAT in Indonesia: Implications and Alternatives for Taxation in 2025

• Indonesians will have to pay more for most goods in 2025 due to an increase in VAT to 12%
• The hike in VAT is part of the gradual increase planned in the 2021 Tax Harmonization Law
• Rising VAT is seen as a logical choice to increase revenue for the government
• However, relying solely on VAT is considered a lazy way to increase tax revenue
• The government should balance the regressive tax regime with other progressive means, such as a wealth tax or luxury goods tax
• Utilizing the core tax system expected to take effect in July 2024 could help improve tax collection and management.

Source: thejakartapost.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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