Gov’t to Raise VAT Rate to 11 Percent on April 1, 2022

Minister of Finance Sri Mulyani (Photo: Agung/PR)

In accordance with the Law on Harmonization of Tax Regulations (UU HPP), the rate of Value Added Tax (VAT) will be raised to 11 percent starting April 1, 2022, Minister of Finance Sri Mulyani has announced.

The rate, she added, is still below the world-average VAT rate.

“The world-average VAT rate is at 15 percent, including in the OECD countries and others, while Indonesia is at 10 percent. Thus, we will raise it to 11 (percent) and later 12 (percent) in 2025,” said the Minister, Tuesday (03/22).

Sri fully acknowledged that the public and the business sector are currently focusing on economic recovery. However, she added, this does not prevent the Government from building a strong tax foundation. Especially during the pandemic, the State Budget has become an extraordinary instrument, so it needs to be immediately rehabilitated.

“So, the Government is seeking to find another income to be on par with the OECD region or countries in the world. Indonesia is not exaggerating,” she stated.

Sri emphasized that taxes are mutual cooperation from the Indonesian economy side from the relatively well-off and the collected taxes will benefit the public.

“We obviously need better education, better health, stronger defense forces, powerful police to enforce the law and security. We can achieve that only if the tax foundation is strong,” she remarked. (PR Ministry of Finance/UN) (EST/MUR)