According to Indrawati, the three commodities are necessary for the general public. Hence, the government decided to cover the increased gap through the government-borne VAT (DTP).
Jakarta (ANTARA) - The Indonesian government will bear a one percent increase in value-added tax (VAT) for three commodities after implementing the 12 percent VAT on January 1, 2025.

The three commodities are wheat flour, sugar for industry, and affordable cooking oil or MinyaKita.

"The VAT for those three commodities will remain at 11 percent. From the increase to 12 percent, the government will cover the one percent," Finance Minister Sri Mulyani Indrawati stated at a press conference in Jakarta on Monday.

According to Indrawati, the three commodities are necessary for the general public. Hence, the government decided to cover the increased gap through the government-borne VAT (DTP).

Indrawati remarked that this decision reflected the government's commitment to preparing fiscal instruments that side with the people.

On the same occasion, Minister of Trade Budi Santoso explained that the DTP aims to maintain the people's purchasing power, especially those with low incomes, for the consumption of basic goods.

The DTP is given for wheat flour as this commodity is a staple food consumed by the general public, especially low-income people.

Meanwhile, sugar is widely used by the food and beverage industry. The DTP on sugar for industry is expected to support industrial activities to drive the economy.

Santoso remarked that the cooking oil MinyaKita is included in the domestic market obligation (DMO) to replace bulk oil.

The government has officially set a 12 percent VAT rate increase starting January 1, 2025.

Coordinating Minister for Economic Affairs Airlangga Hartarto remarked that the determination of 12 percent VAT is in accordance with Law Number 7 of 2021 concerning Harmonization of Tax Regulations (HPP).

However, the government provides tax exemption for strategic goods and services.

Hartarto noted that the government will provide facilities by exempting VAT for some basic necessities and important goods.

Related news: Government to officially apply 12 percent VAT starting from January 1
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Translator: Imamatul Silfia, Resinta Sulistiyandari
Editor: Arie Novarina
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