"This policy is an inseparable part of tax reform and fiscal consolidation as the foundation of a more equitable, optimal, and sustainable tax system," according to the Ministry of Finance's official statement in Jakarta on Friday.
The Ministry of Finance detailed certain goods and services provided with VAT-free facilities covering basic needs, such as rice, grain, corn, sago, soybeans, salt, meat, eggs, milk, fruits, vegetables, and consumable sugar.
The others are health services, education services, social services, insurance services, financial services, public transportation services, and labor services.
Furthermore, VAT-free facilities are provided for vaccines, textbooks, holy books, clean water that includes the cost of connection or installation, and the cost of fixed load and electricity, except for households, with a power consumption of more than 6,600 VA.
Simple flats, low-cost apartment compound (rusunami), hospitals, low-cost houses, construction services for houses of worship and construction services for national disasters also get VAT-free facilities.
VAT-free facilities are also provided for machinery, marine fishery products, livestock, seeds, animal feed, fish feed, feed ingredients, rattan leather and raw bark, and raw material for silver handicrafts.
Petroleum, natural gas or gas through pipelines, LNG and CNG as well as geothermal, gold bullion and granule gold as well as weapons or defense equipment and aerial photography equipment are also granted VAT-free facilities.
Meanwhile, goods and services that are not subject to VAT include goods that are objects of local tax, specifically food and beverages served at hotels, restaurants, food stalls, and others.
Furthermore, services that are objects of local taxation are services for providing parking spaces, arts and entertainment services, hospitality services, and catering or catering services.
Money, gold bars for the purpose of state foreign exchange reserves, securities as well as religious services and services provided by the government are also not subject to VAT.
This VAT rate adjustment was also accompanied by a decrease in the rate of income tax (PPh) for individuals, with income up to Rp60 million, from 15 percent to five percent.
The government also exempts taxes for MSME actors, with a turnover of up to Rp500 million, provides final VAT facilities with a certain smaller amount, specifically one percent, two percent, or three percent.
"Restitution service of VAT, which is accelerated up to Rp5 billion, will also continue to be provided," according to the Ministry of Finance.
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The government will continue and strengthen its support in the form of social protection to maintain the people's purchasing power as well as national economic conditions through the state budget.
The government is also committed to continuing to formulate balanced policies to support economic recovery and help vulnerable and disadvantaged groups.
This effort also aims to support the business world, especially small and medium groups, while still paying attention to the health of state finances.
The Directorate General of Taxes (DJP) has also adjusted tax service applications, such as Desktop e-Faktur, Host to Host e-Faktur, Web e-Faktur, VAT Refund, and e-Nofa Online.
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Translator: Astrid F, Azis Kurmala
Editor: Rahmad Nasution
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