While the room to increase the Value Added Tax is still wide open, the government has decided to choose a lighter policy.
Jakarta (ANTARA) - The increase in Value Added Tax by 1 percent to 11 percent from April 1, 2022, is aimed at redistributing wealth to benefit the poor and reducing the economic gap, the Presidential Staff Office (KSP) said.

The government has officially raised the Value Added Tax from 10 percent to 11 percent, in accordance with Law No. 7 of 2021 on Taxation Regulation Harmonization (HPP).

At Bina Graha Building, Presidential Palace Complex, here, on Friday, KSP main expert staff Edy Priyono informed that the government could have raised the Value Added Tax by 5 percent to 15 percent.

However, the government considered the fact that currently, the domestic economy is in a recovery phase. Hence, it increased the Value Added Tax by only 1 percent.

"While the room to increase the Value Added Tax is still wide open, the government has decided to choose a lighter policy," Priyono remarked.

The increase in Value Added Tax is meant to build a foundation for taxation, he explained.

With this, the state's revenue in the form of tax can be redistributed for the benefit of the poor or people who need it more, he added.

Most nations in the world have a higher Value Added Tax compared to Indonesia, such as Turkey, which levies a tax of 18 percent, Argentina 21 percent, and Saudi Arabia and the European Union, which impose a tax of 15 percent each, he highlighted.

"There are several countries with lower Value Added Tax than us such as Taiwan with 5 percent and Canada 5 percent," he informed.

"In fact, there are countries that impose no Value Added Tax, such as Kuwait and Qatar. Of course, this is adjusted based on the condition in each nation," he added.

As per Law No. 7 of 2021, the Value Added Tax tariff will be increased to 12 percent by January 1, 2025, at the latest.

The Value Added Tax will not be imposed on certain goods and services such as basic needs, social services, education services, financial services, and medical services.

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Translator: Indra Arief P, Fadhli Ruhman
Editor: Suharto
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