Government and the House of Representatives (DPR) have agreed to selectively impose a Value Added Tax (VAT) of 12 percent − with focus on luxury goods −starting January 1, 2025.
Deputy Speaker of the House of Representatives, Sufmi Dasco Ahmad, cited that VAT would only be imposed on certain commodities categorized as luxury goods, both domestic and imported. These goods include luxury apartments, houses and vehicles.
“The 12 percent VAT will only be imposed on luxury goods. So (its implementation) will be selective,” Dasco spoke to the media after a meeting with President Prabowo Subianto at the Presidential Office in Jakarta on Thursday, December 5, 2024.
It was agreed in the meeting involving Commission XI of the DPR − which oversees finance, national development planning, monetary, and the financial services sector − that the implementation of this policy would be in accordance with the provisions of the Law.
Dasco said further that the need for basic goods and services related to public services will not be subject to VAT.
“Basic needs, education services, health services, banking services, and government services will be free from VAT,” he said.
The implementation of selective VAT is expected to boost state revenues without burdening low-income people. The government has ensured that this policy will be carried out transparently and fairly.
