Gov’t Unveils Goods and Services with Free VAT, Not Subject to VAT

PR Office of Ministry of Finance

Indonesian Government has adjusted Value-Added Tax (VAT) from 10 percent to 11 percent on 1 April 2022, as mandated by Article 7 of Law Number 7 of 2021 on Tax Regulation Harmonization.

The increase of VAT is aimed to strengthen Indonesian economy in the long term and to support the State Budget (APBN), particularly in the National Economy Recovery (PEN) program, including incentive provision to handle COVID-19 impacts. However, a number of certain goods and services are still facilitated with free VAT or still not subject to VAT.

Certain goods and services that are still facilitated with free VAT, among others, basic necessities, health service, education service, social service, insurance service, financial service, transportation service, labor service, vaccines, school books and holy books, clean water including installation fee and fixed charges, electricity, basic high-rise housing, privately owned basic high-rise housing, hospital, very simple free standing house, worship buildings and disaster relief construction services, machines, marine fisheries, livestock farming, seeds, livestock’s food, fish’s food, raw materials for animal feed, hide and rawhide, raw materials for silver crafts, oil, gas, geothermal energy, gold bars and granulated gold, weapons/primary weapons defense system, and aerial photography equipments.

Meanwhile, certain goods and services that are not subject to VAT, among others, the goods that are classified as local tax objects, the services that are classified as local tax objects, money, gold bars for the state’s foreign exchange reserves, bonds, religious services, and services provided by the Government.

“The policy is an inseparable part of tax reform and fiscal consolidation as a foundation of a fairer, more optimal and sustainable tax system,” Head of Bureau of Communications and Information Services, Ministry of Finance, Rahayu Puspasari said, as quoted from the official website of Ministry of Finance, on Friday (04/01).

The Government will continue to formulate a balanced policy to support economic recovery, to help the vulnerable and underprivileged groups, and to support business community, particularly the small and medium groups, by still paying attention to the the state finance’s robustness for state’s sustainable life. (PR Office of Ministry of Finance/UN) (AW/HD/MUR)