DIGIVESTASI - 12% VAT to Be Implemented in January 2025, Targeting Luxury Goods, The 12% Value Added Tax (VAT), set to be implemented in January 2025 for luxury goods, including imported items, is expected to have minimal impact on the purchasing power of the general public. The Chairman of Commission VII of the Indonesian House of Representatives, Saleh Partaonan Daulay, stated that this move will not exert significant pressure, as the tax targets financially capable individuals.

"If it is selectively imposed only on luxury goods, the impact will not be significant because those who will pay the tax are those who can afford it," Saleh said during the Closing Bell program on CNBC Indonesia, quoted on Tuesday (10/12/2024).

Saleh also emphasized that the VAT should not be applied to essential goods such as rice, sugar, or salt, including those imported.

"If basic goods like rice, salt, and sugar are subjected to a tax increase, it will certainly cause social unrest," Saleh stressed.

President Prabowo Subianto had previously explained this policy, which is based on Law No. 7 of 2021 concerning the Harmonization of Tax Regulations.

Prabowo clarified that the VAT increase is mandated by law, but it will be selectively applied to certain goods, particularly luxury items.

"This VAT is a mandate of the law, and we will implement it, but only for luxury goods. For the poor, the government will continue to protect them. Since the end of 2023, we have not collected taxes on basic necessities to assist the underprivileged," Prabowo stated at the Merdeka Palace on Saturday (7/12/2024).

He also emphasized that this policy is designed not to burden the lower-income population but to target those with greater economic capacity.

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