Finance Minister in Indonesia Confirms VAT Increase to 12% Effective January 1, 2025

The Finance Minister has confirmed that the value-added tax (VAT) in Indonesia will increase from 11% to 12%, effective January 1, 2025. This is part of the Tax Harmonisation Law of 2021, which outlines a two-stage VAT rise. Despite facing public criticism regarding potential price impacts, the Minister defended the necessity of this increase

The Finance Minister has officially confirmed that the Value Added Tax (VAT) will rise from 11% to 12% starting January 1, 2025, following speculation about a potential increase in 2024.

This adjustment is part of the phased implementation outlined in the Tax Harmonisation Law of 2021, which originally planned for a two-stage VAT increase. Despite facing public criticism regarding its impact on prices, the minister defended the decision, emphasizing its necessity.

Meanwhile, the President has suggested alternative methods for increasing tax revenues without raising rates, prompting calls from lawmakers to reconsider the VAT hike amid concerns about its economic effects.