Ivanovich Agusta, head of the ministry's Information and Development Agency, emphasized that the 12 percent VAT will only apply to luxury goods and services, including residential power connections between 3,500 VA and 6,600 VA.
"We are confident that the VAT hike will not significantly impact rural residents, as the new rate will only apply to electricity subscriptions above 3,500 VA, while most rural households use 1,300 VA," he said in Badung, Bali, on Thursday.
Agusta also referred to the government's commitment to digitizing rural areas, noting that his ministry might propose exempting certain electronic devices required for rural digitization from the new VAT rule.
"If necessary, the Ministry of Villages may advocate for excluding communication and digital tools essential for rural residents from the luxury goods list," he added.
In light of the 12 percent VAT decision, Coordinating Minister for Economic Affairs Airlangga Hartarto underscored that the government had prepared several incentives to help people adjust to the new tax rate, effective January 1, 2025.
"To maintain people's welfare, the government has devised incentives in the form of the Package of Economic Stimuli to aid citizens from various levels of society," he remarked in Jakarta on Monday (December 16).
Among the incentives to be given next year is a 50 percent discount on electricity for houses with a power capacity of 2,200 VA or below. This rebate will be available throughout the January-February 2025 period.
Moreover, a range of goods and services will remain VAT-free, including rice, chicken meat, several types of fish, eggs, vegetables, milk, sugar, educational services, health services, public transport, financial services, insurance, books, polio vaccines, and drinking water.
Related news: Government to officially apply 12 percent VAT starting from January 1
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Translator: Lintang B, Tegar Nurfitra
Editor: Tia Mutiasari
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