Prabowo and Jokowi Dodge Responsibility: 12% VAT Decision Deadlocked

Suryo Utomo, the Finance Ministry's Director General of Taxation, stated that the planned increase in the value-added tax (VAT) rate to 12 percent in 2025 depends on the new government. The VAT increase will consider the government transition and Indonesia's economic conditions. "Due to the government transition, there is a need for political caution in communicating about the 12 percent VAT," he said on Mar. 25.

Previously, Finance Minister Sri Mulyani stated that the ministry would respect the new government's decision regarding VAT. "So if the new government maintains the VAT at 11 percent, then certainly the revenue target will be adjusted accordingly with the Law on Harmonization of Tax Regulations [HPP], and it will be discussed later," she said during the Commission XI Working Meeting with the Finance Ministry on Mar. 19.

Separately, Shinta Widjaja Kamdani, Chairman of the Indonesian Employers Association (Apindo), urged President and Vice President-elect Prabowo Subianto-Gibran Rakabuming Raka to evaluate the 12 percent VAT rate. According to her, the increase in VAT to 12 percent should not be a sudden policy, as both the government and businesses need to prepare themselves. "What needs attention is purchasing power; consumers ultimately bear the increase in VAT," she said.