Jakarta (VNA) – Indonesian Finance Minister Sri Mulyani Indrawati said on November 14 that the government will raise value added tax (VAT) in January next year to ensure national budget revenue.
Her statement came amid criticism that the decision will hurt consumers and that the government needs to give a clear explanation.
The VAT is expected to increase to 12% based on a law passed in 2021. Some lawmakers, business groups, and economists said the tax increase should be delayed as it could reduce people's purchasing power.
According to Sri Mulyani, Indonesia aims to collect more than 2.49 quadrillion IDR (about 156 billion USD) for fiscal year 2025, up 12.3% from expected tax revenue in current fiscal year.
Meanwhile, lawmaker Muhammad Kholid called on the government to review the VAT collection policy as this could harm the economy.
Indonesia's economic growth has held steady at around 5% since the COVID-19 pandemic. In the third quarter of 2024, its GDP expanded by 4.95% from a year earlier./.
