President Prabowo, House Speakers Talk on 12％ VAT Rate

Press statement of the Speakers of the House at the Merdeka Palace, Jakarta, Thursday (12/05). (Photo by: BPMI of Presidential Secretariat/Rusman)

President Prabowo Subianto on Thursday (12/05) received speakers of the House of Representatives (DPR) at the Merdeka Palace, Jakarta to discuss the Government’s plan to increase the Value Added Tax (VAT) to 12 percent.

According to the law, the new VAT rate will take effect in January 2025.

After the meeting, Chairperson of Commission 11 of the House Mukhamad Misbakhun shared the outcomes of discussions with the President, emphasizing that the 12 percent VAT will be applied selectively. He stated that basic goods, educational, healthcare, banking, and public services will remain exempt from VAT under the current policy.

“The VAT will be applied according to the time mandated by the law, which is effective from January 1, 2025. However, it will be applied selectively to certain commodities, both domestically produced and imported luxury goods, so that only consumers of luxury goods will be subjected to the 12 percent VAT rate,” Misbakhun said.

He went on to say that the Government is also considering implementing a non-uniform VAT structure. However, this policy is still under comprehensive review.

“This is still being reviewed. The public should not worry as essential goods, educational services, healthcare services, banking services, and other public and governmental services will remain exempt from VAT,” Misbakhun added.

Meanwhile, Deputy Speaker of the House Sufmi Dasco Ahmad said that President Prabowo Subianto is considering the House’s suggestion to lower VAT rates on staple goods. The President will review the proposal carefully, he added.

“Perhaps within an hour, the President will ask Minister of Finance and several other ministers to hold a meeting to review suggestions from the public and the House regarding tax adjustments that should be lowered,” Sufmi Dasco said.

On the same occasion, Minister of State Secretary Prasetyo Hadi highlighted the importance of dialogue between the Government and the House. According to him, this new approach demonstrates a quick response to public feedback and aspirations.

“Today’s process represents a new culture initiated by the President in collaboration with the House speakers. Any feedback from the public, especially from the House related to public interests, is responded quickly,” said the Minister. (BPMI of Presidential Secretariat/DNS) (EST/MUR)