Almost 1,500 modern retail outlets have stopped operating in the last 18 months
Jakarta (ANTARA) - The Indonesian Association of Retailers (Aprindo) has called on the government to review the increase in value-added tax (VAT) costs and the imposition of multi-tariff taxes.

Aprindo Chairman Roy Nicholas Mandey stated that the increase in tariffs and the application of multiple VAT rates during the pandemic was not appropriate since the modern retail sector was experiencing a slump.

"Almost 1,500 modern retail outlets have stopped operating in the last 18 months," Mandey said in a statement here on Thursday.

Aprindo assessed that the increase in VAT rate, from 10 percent to 12 percent, will have an impact by reducing the people's purchasing power, thereby eliminating efforts to maintain household consumption as the biggest contributor to driving national economic growth.

In the second quarter of 2021, household consumption continued to be the maintain contributor to the economic growth, at 55.07 percent of the GDP.

"The increase in tax rates will increase the inflation rate in line with the increase in the price of goods," Mandey noted.

Mandey later stated that the situation will be further eroded when a multi-tariff system is imposed, with the lowest figure of five percent applicable for low-income or marginalized people, who were earlier not taxed, while the highest being 15 percent.

Moreover, multi-tariff differences can potentially fuel the black market, which is the main choice of consumers as well as result in an increase in spending on goods abroad whose prices are more competitive.

Mandey sought a suspension in the application of income tax for at least one percent on the gross income of companies with loss status.

"This minimum tax will add further burden on various sectors, including retailers, who suffer losses. They choose to close their outlets that results in loss of investment and mass layoffs," he noted.

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Translator: Sugiharto P, Resinta S
Editor: Sri Haryati
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