Indonesia’s government has announced a relief package to mitigate the effects of the upcoming VAT increase to 12%, set to take effect on 1 January 2025.
Earlier, Indonesia’s Finance Minister, Sri Mulyani Indrawati confirmed that the VAT rate in Indonesia will be increased from 11% to 12% next year. This adjustment follows the 2022 Tax Regulation Harmonization Law. The 2022 State Budget, under Law No. 7 of 2021, raised the VAT rate from 10% to 11% starting 1 April 2022.
The relief measures include food assistance programmes for low-income households, a 50% discount on electricity bills for eligible households for two months, and VAT exemptions for essential goods and services such as food, education, healthcare, transportation, labor, financial services, insurance, vaccines, and water.
Furthermore, the VAT exemption on house purchases up to IDR 5 billion is extended until June 2025, with a 50% exemption until December 2025.
