Eka Yudha Saputra, Jakarta – The Advocacy Democracy on Tax Justice (TAUD-SKP) considers the Constitutional Court's decision to reject the lawsuit against the regulation governing value-added tax (VAT) perpetuates injustice in the tax system.
On Thursday, August 14, 2025, the court dismissed the petition to review Law Number 7 of 2021 concerning the Harmonization of Tax Regulations (HPP Law), which regulates the increase of VAT from 11 to 12 percent.
Representative of TAUD-SKP, Afif Abdul Qoyim, said the decision further legitimizes the unjust VAT policy, especially for underprivileged citizens. Despite data from PricewaterhouseCoopers (PwC) stating that Indonesia has one of the highest VAT rates in ASEAN countries.
The poor, Afif said, are "forced to pay a higher percentage of VAT compared to the super-rich or crazy rich individuals with assets in billions, or even trillions," in a written statement on Friday, August 15, 2025.
Afif argued that the decision could lead to the implementation of a 15 percent VAT which deemed a breach of the constitution. Such a high rate could paralyze the national economy by way of layoffs, reducing people's purchasing power, and increasing the burden on the consumption of poor households.
"Indonesia's VAT policy is known for being imposed on all income levels, which is regressive because it fails to consider each income decile's ability to pay the taxes," he said.
The lawsuit for case 11/PUU-XXIII/2025 was filed by fisher Asmania; students Fauzan Hakami and Muhamad Agus Salim; private employee and person with disability Risnawati Utami; warung (small culinary booth) merchant Rusin; online motorcycle taxi driver Warsiti Hajar; and the Indonesia Mental Health Association Foundation. A total of 33 individuals acted as legal advisors to the petitioners and were part of the Advocacy for Democracy on Tax Justice team.
According to Constitutional Justice Ridwan Mansyur, the law stipulates a VAT rate of 11 percent starting from April 1, 2022, and 12 percent, which applies no later than January 1, 2025. This is a change from the regulation of a 10 percent VAT rate that has not been amended since the issuance of Law Number 8 of 1983. Such a change, he continued, needs to be made to meet the country's financing needs.
Ridwan stated that based on Article 23A of the 1945 Constitution, changes in tax rates, including VAT, can be made as long as they are ruled under a law.
"Along with the implementation of the VAT rate changes, the government also provided incentives to reduce the burden on the people," said Ridwan.
Ridwan also highlighted Finance Minister Regulation Number 131 of 2024 concerning taxable goods, which regulates the Taxable Assessment Basis, or DPP of Other Values to effectively manage the VAT burden. Therefore, the VAT rate for consumers remains the same as when the 11 percent VAT was imposed.
The panel of judges stated that this is within the authority given by the law to the Finance Minister. Therefore, Ridwan stated that the petitioners' argument stating the inconsistency between the HPP Law's 12 percent VAT rate effective from January 1, 2025, and Ministerial Regulation No. 131 of 2024 is unfounded in law.
– Amelia Rahima Sari contributed to the writing of this article