Indonesia to Increase VAT to 12% on Luxury Goods in 2025

• Indonesian President Prabowo Subianto has agreed to increase the value-added tax to 12% for luxury goods starting January 1, 2025
• The current VAT rate is 11% and will remain the same for non-luxury goods
• Some items like staple foods will continue to be exempt from VAT
• The decision aims to address public concerns about the impact of a VAT increase on purchasing power
• The government will later define which goods are considered luxury and subject to the higher VAT rate
• The VAT increase is part of efforts to improve the structural health of the budget and will be accompanied by fiscal stimulus measures
• Despite the selective VAT increase, the government and parliament aim to meet the state revenue target through other collection methods
• U.S. stocks fell with significant losses in United Health Group and a general decline in technology shares
• During his campaign, Prabowo aimed to increase tax revenue to 18% of GDP, which would add about 100 billion dollars in tax revenue
• The Indonesian presidential office and finance ministry have not commented on the VAT increase.

Source: reuters.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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