"Yesterday, the government announced incentive packages expected to assist middle-class citizens," Coordinating Economic Affairs Minister Airlangga Hartarto told the media on Tuesday.
He emphasized that the 12 percent VAT policy is in accordance with a law promulgated by the House of Representatives (DPR).
He noted that to ensure that the execution of the policy aligns with expectations, the government will offer incentives in the form of discounts on the prices of certain commodities.
Hartarto mentioned a 50 percent electricity discount for houses with a power capacity of 2,200 VA or below.
"The number of beneficiaries will be enormous, nearly 81.4 million, or 97 percent of total electricity consumers. I believe such an incentive will boost people's purchasing power considerably," he explained.
On Monday, the government stipulated that the plan to increase the VAT rate from 11 percent to 12 percent would be effective from January 1, 2025.
"This decision is in line with the Law on Harmonization of Tax Regulations. As scheduled, the VAT will increase to 12 percent as of January 1 next year," Hartarto remarked in a press conference on economic policy packages in Jakarta.
He noted that several staple commodities will remain VAT-free, such as rice, chicken meat, chicken eggs, beef, sugar, chilies, and shallots.
The government will bear 1 percentage point of the VAT on some basic goods, such as wheat flour and subsidized cooking oil, keeping the VAT rate for such products at 11 percent.
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Translator: Livia K, Tegar Nurfitra
Editor: Anton Santoso
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