President Prabowo Subianto Clarifies 12% VAT on Luxury Goods
President Prabowo Subianto recently addressed the nation to clarify the implementation of the increased value-added tax (VAT) of 12 percent, specifically focusing on luxury goods. This new rate marks a slight uptick from the previous 11 percent VAT, reflecting the government’s efforts to ensure a fair and pro-people taxation system.
Scope of the VAT
During a press conference at the Ministry of Finance office in Jakarta, President Prabowo emphasized that the 12 percent VAT would exclusively apply to luxury goods and services. These include items like private jets, cruise ships, yachts, and luxury homes predominantly utilized by the upper class. The goal behind this policy shift is to create a taxation system that benefits the majority of the population by exempting essential items from the increased tax burden.
Exempted Goods and Services
Prabowo highlighted that essential goods and services, such as rice, meat, fish, eggs, vegetables, fresh milk, and more, would not be subject to the 12 percent VAT. Additionally, education services, health services, public transportation, public apartments, and public home rental services fall under the exempted category, ensuring that basic necessities remain affordable for all citizens. This exemption aligns with the government’s commitment to supporting the general public’s welfare through strategic tax policies.
Implementation and Incentives
The implementation of the 12 percent VAT on luxury goods is scheduled to commence on January 1, 2025, in accordance with Law Number 7 of 2021 on the Harmonization of Tax Regulations. Following this change, the government plans to introduce various incentives as part of the Economic Stimulus Package. Finance Minister Sri Mulyani Indrawati emphasized that essential goods and services crucial to the daily lives of citizens will continue to enjoy VAT-free status or a zero percent VAT rate.
In conclusion, President Prabowo’s announcement sheds light on the government’s commitment to creating an equitable taxation system that prioritizes the needs of the people. By exempting basic necessities from the increased VAT rate and providing incentives to support vulnerable communities, Indonesia aims to foster economic stability and social welfare for all its citizens.
This rewrite aims to provide a comprehensive overview of President Prabowo’s statement regarding the 12 percent VAT on luxury goods, emphasizing the impact on essential items and the government’s broader objectives.