Jakarta (ANTARA) - The government's decision to impose a 12 percent value-added tax (VAT) only on luxury goods and services could help maintain the competitiveness of domestic industrial actors, the Indonesian Chamber of Commerce and Industry (Kadin) stated.
This decision, announced on December 31, 2024, accommodates the public's opposition to the initial plan to increase the VAT rate from 11 percent to 12 percent for nearly all goods and services, excluding staple commodities and certain products.
"This policy provides space for national industries to remain competitive and supports sustainable, inclusive economic growth," Kadin Chairman Arsjad Rasjid noted in his office's statement issued in Jakarta on Saturday.
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He also said that the decision, which is put forward in Finance Minister's Regulation No. 131 of 2024, could be viewed as a strategic maneuver aimed at protecting the purchasing power of middle-class citizens.
Rasjid then remarked that prior to the regulation's issuance, the Kadin had actively conveyed inputs and suggestions from business associations regarding the VAT increase to the government.
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In the same statement, Kadin Deputy Chairman for Fiscal and Public Policies, Suryadi Sasmita, appealed to enterprises that have already applied a 12 percent VAT rate on non-luxury products to compensate their customers for the one percent point overcharge.
He also highlighted that business actors had fully comprehended the changes introduced by the ministerial regulation and are well aware of the important role of taxation in achieving the government's goal of eight percent economic growth.
"Hence, the Kadin, together with all industrial associations, are ready to pave the way for efficient and effective tax policies that are supportive of the national economic growth target," he concluded.
