Indonesia Officially Increases Tax 12 Percent on Luxury Goods

ASIATODAY.ID, JAKARTA – The President of the Republic of Indonesia Prabowo Subianto has announced a 12 percent increase in Value Added Tax (VAT) as of January 1 2025. The tax increase is only for luxury category goods.

“The increase in the VAT rate from 11 percent to 12 percent is only imposed on luxury goods/services. The provisions are that goods/services that have so far been subject to VAT are luxury goods consumed by the well-off,” said President Prabowo at the Ministry of Finance office, Tuesday, December 31 2024 .

Minister of Finance, Sri Mulyani explained that luxury goods that are subject to 12 percent VAT are goods that are currently subject to PPnBM (Sales Tax on Luxury Goods), namely goods that are regulated in Minister of Finance Regulation (PMK) Number 15/2023 and PMK Number 42/ 2022.

The luxury goods in question are:

1. luxury residential groups such as luxury houses, apartments, condominiums, town houses and the like, whose selling price is IDR 30 billion and above.
2. Hot air balloons, namely steerable hot air balloons, airplanes, other aircraft without propulsion.
3. Bullets, firearms, other firearms, except for state purposes.
4. Aircraft other than those subject to the 40 percent tariff, namely, helicopters, airplanes and other air vehicles (private jets).
5. Luxury cruise ship group, except those for public transportation. Those subject to 12 percent VAT, for example cruise ships, yachts, excursion ships.

Meanwhile, those that are not subject to 12 percent VAT are all goods and services that have been free from VAT. “Still VAT free or zero percent VAT,” said Sri Mulyani.

All goods and services that have been subject to 11 percent VAT are also not subject to 12 percent VAT. This means that the VAT remains 11 percent.

The Minister of Finance also reiterated that the stimulus packages for the community and tax incentives that had been announced remained in effect, namely:

1. 10 kilograms of rice assistance per month January-February 2025, for 16 million Food Assistance Recipients (PBP).
2. Electricity customers with a power of 2200 VA or lower are given an electricity discount of 50 percent during January-February 2025.
3. Final income tax is 0.5 percent of turnover and Micro, Small and Medium Enterprises with turnover under IDR 500 million per year are exempt from income tax.
4. PPh article 21 is borne by the government (DTP) for workers with salaries up to IDR 10 million/month.
5. Financing labor-intensive industries for machine revitalization with a 5 percent interest subsidy.
6. Assistance of 50 percent work accident insurance in labor-intensive sectors for 6 months.
7. Other incentives include ease of access to Job Loss Guarantee, incentives for electric cars and house purchases. (AT Network)

Follow Us at Google News and WA Channel