According to reporting from Tempo, Indonesia’s Ministry of Finance has announced that the standard value-added tax (VAT) will remain at 11-percent in 2024. The ministry’s head of the budget policy center, Wahyu Utomo, made the statement in response to growing concerns over a proposed VAT hike to 12-percent.
Wahyu explained that the increase in VAT to 12-percent is included in the Tax Harmonization Law which will take effect no later than 2025.
“It’s not 2025 yet, so I won’t answer it yet,” Wahyu said in a mini talk show in Jakarta on Wednesday (30/09/23.) “But, the point is that in 2024, the VAT will still be 11-percent.”
Josua Pardede, a chief economist at Bank Permata, said Indonesia’s economy was still driven by household consumption, which would eventually affect the value-added tax. He also said it was middle and upper-class households that boost consumer spending, report Tempo.
“Specifically, 45-percent of them are upper-class households, 30-percent of them are middle-class households, and less than 20-percent of them are lower middle-class households,” Josua outlined on the same occasion.
In other words, he assessed that middle and upper-class households saw consumption growth. Moreover, the public mobility restrictions or PPKM during the COVID-19 pandemic have been lifted. “They can now spend money on travel,” Josua said.
Source: Tempo
Stock image by Jon Tyson on Unsplash
