Sri Mulyani Raises VAT to 11% Starting April 2022
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8 October 2021 12:08 WIB
TEMPO.CO, Jakarta - Finance Minister Sri Mulyani Indrawati said that the government officially raised the value added tax (VAT). Starting April 1, 2022, the VAT will be raised from 10 percent to 11 percent.
This provision is regulated in the Law on Harmonization of Tax Regulations (UU HPP) which was recently passed by the House of Representatives (DPR).
"The VAT was originally proposed to be raised to 12 percent. After the DPR listened and took into account public views, they and the government agreed that the increase would be gradual," Sri said in a press conference aired via her ministry's official YouTube channel, Thursday, 7 October.
The government gradually increases the VAT rate to maintain the economic recovery momentum. The increase in tariffs will continue with due regard to domestic economic conditions.
At the latest, the VAT will increase again to 12 percent as previously planned on January 1, 2025. Sri Mulyani ensured that the government would not impose VAT on basic necessities, which was also discussed in the draft HPP Law.
VAT for basic necessities only applies to staple goods under premium categories. The same applies to the service sector, such as health, education, to social services.
The HPP Law also stipulates special tariffs for certain types of goods and services, such as the goods and services taxes (GST). Further provisions regarding special VAT rates will be regulated in the Finance Minister's Regulation (PMK).
Read: Sri Mulyani Says Taxation Harmonization Bill for Just Tax System
Francisca Christy Rosana