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TEMPO.CO, Jakarta - The Chief of the Indonesian Chamber of Commerce and Industry (Kadin), Arsjad Rasjid, urged the government to postpone the increase in the value-added tax (VAT) from 11 percent to 12 percent. This is because the current economic situation has changed significantly since the policy was decided three years ago.

"When the 12 percent VAT was decided, the economic conditions were different. The situation is very different," Arsjad said during a press conference at the Pullman Hotel in Jakarta on Friday, November 29, 2024.

The regulations regarding the gradual increase of the value-added tax are stipulated in Law No. 7 of 2021 on the Harmonization of Tax Regulations (Tax Law Harmonization). VAT was previously increased from 10 percent to 11 percent in 2022. On January 1, 2025, VAT will increase again to 12 percent.

Arsjad Rasjid noted that the current global economy has changed significantly. He highlighted the geopolitical conditions that have affected the economies of various countries, including Indonesia. He even mentioned that the purchasing power in the superpower country, the United States of America (US), has also decreased. "With the current situation, we recommend the government to re-evaluate the 12 percent VAT," he said.

The Kadin chief said that the 12 percent VAT does not only affect consumers but also businesses. This could potentially disrupt the domestic economy. However, he stressed the need to protect the domestic economy. He advised the government to focus on eliminating illegal imports as a step to protect the domestic economy.

The Chair of the National Economic Council, Luhut Binsar Pandjaitan, has previously stated that the plan to increase the Value Added Tax (VAT) to 12 percent on January 1, 2025 is likely to be postponed. However, he mentioned that the decision on the VAT was still awaiting guidance from President Prabowo Subianto. "It is almost certain that it will be postponed," he told the media in Kuningan, South Jakarta, on Wednesday, November 27, 2024.

Luhut mentioned that before the VAT increase takes effect, the government will provide economic stimulus to the public one to two months before implementing the policy. He said the government was currently calculating the stimulus package. "Before that happens (12 percent VAT), economic stimulus must be provided to the people first," he said.

Source : tempo