Indonesia to Implement Selective VAT Increase on Luxury Goods in 2025

• Indonesia’s president agrees to increase VAT to 12% from 11% starting January 1, 2025
• The VAT increase will only apply to luxury goods while other goods will remain at the current rate of 11%
• Some items like staple foods will continue to be exempt from VAT
• The decision aims to improve the structural health of the budget and includes planned fiscal stimulus
• The specific goods that will be subject to the new VAT rate will be determined later
• The government and parliament aim to meet state revenue targets despite the selective VAT increase by considering other collection methods
• Public pressure exists to delay the VAT increase due to concerns about its impact on purchasing power
• The items likely to face higher VAT are similar to those currently under luxury sales tax such as certain houses, cars, airplanes, and yachts

Source: businesstimes.com.sg

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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