Based on Harmonization of Tax Regulations Law, VAT rate which was originally 10% will increase to 11% as of April 1, 2022. This topic has become a national conversation and included in Spectaxcular 2022’s discussion material.
Because corporate VAT and income tax are the two largest contributors of taxes in Indonesia, an increase in VAT rate is required to lay a solid foundation for Indonesian taxation.
During the event, Sri Mulyani asked the audience regarding this topic, "Is VAT rate of 11% considered high?" asked Sri Mulyani. She stated that 1% increase in VAT still places Indonesia’s VAT rate lower than the average world VAT rate. “G-20 and OECD country have 15% to 15.5% average VAT rate," she explained.
Besides, not all goods and services are subject to increased VAT rate. Government will give a lower rate and VAT exemption on certain types of goods and services, such as education, health, and basic needs (rice, etc.).
In special case, government will regulate VAT rate at 1%, 2%, or 3% of gross profit. "There are goods and services that are consumed by many people and become basic necessities. Thus, they are given the possibility for only 1%, 2% and 3% VAT rate," added Sri Mulyani.
The Minister of Finance expects that all tax policies can be used to achieve justice for all Taxpayer, as taxes paid by Taxpayers are a form of national defense and the mainstay of nation development.
