, - Indonesia's value-added tax or is expected to increase from the current 11 percent to 12 percent next year. The tariff increase policy has been stipulated in Law No. 7 of 2021 on the Harmonization of Regulations or the HPP Law.
Article 7 paragraph 1 of the law states that a 12 percent VAT will be applied no later than January 1, 2025. Ajib Hamdani, economic policy analyst from the Indonesian Employers Association ( ), said that the implementation of the new tax rate is a way of carrying out the fiscal function to increase the country's revenue. "A one percent increase in the VAT rate will contribute to additional revenue of no less than Rp80 trillion in 2025," he said in an official statement quoted on Tuesday, August 13.
His projection is based on the simulation of revenue from VAT and sales tax on luxury goods (PPnBM), which will reach Rp764.3 trillion in 2023. The calculation also took into account economic growth and inflation this year and next, which are 5 percent and 2.
5 percent, respectively. As long as there are no regulations repealing the HPP law's tariff hike article, the government will enforce the policy, Ajib said. However, experience has shown that the implementation of these regulations could be postponed, he said.
"Just like when the government postponed the collection of the carbon tax, which was supposed to be effective from April 1, 2022," he said. According to Ajib, although it has been decided, the VAT hike needs to be studied in more detail as peop.