Yustinus Paat, Jakarta – Amid growing public resistance to the planned increase in value-added tax (VAT), a close ally of President Prabowo Subianto clarified on Friday that specific goods and services will remain exempt from the tax.

Deputy Speaker of the House of Representatives, Sufmi Dasco Ahmad, said the tax exemptions will cover essential goods and services, including basic foodstuffs, products from micro, small, and medium enterprises (MSMEs), public transportation, education, healthcare, financial services, and utilities up to a certain usage threshold.

The new 12 percent VAT rate, set to take effect on January 1, will apply exclusively to luxury goods and services, Dasco explained, without providing further details.

"For goods and services outside these exempt categories, the current 11 percent VAT rate will still apply," he added.

Dasco emphasized the distinction: "It has been confirmed that the 12 percent VAT is exclusively for luxury goods, while the 11 percent rate remains for other categories. Meanwhile, certain items and services will remain completely exempt from VAT."

Although Dasco acknowledged that the government has yet to make a formal announcement, he confirmed the VAT increase will proceed as scheduled on January 1.

His remarks followed a meeting with three deputies of Finance Minister Sri Mulyani Indrawati: Suahasil Nazara, Thomas Djiwandono, and Anggito Abimanyu.

Source: https://jakartaglobe.id/business/basic-commodities-healthcare-and-education-exempt-from-va