TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Businesses relieved at averted VAT hike, but adapting takes time
Business groups have expressed support for the policy U-turn that averted a value-added tax (VAT) hike on Jan. 1, but called on the government to be more predictable as the last-minute decision caused widespread confusion.
Change text size
Gift Premium Articles
to Anyone
Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!
High-ranking officials brief the press about economic stimulus measures intended to cushion the impact of an impending value-added tax (VAT) hike to 12 percent, on Dec. 16, 2024, at the Office of the Coordinating Economic Minister in Jakarta. In a last-minute decision some two weeks later, the VAT hike was limited to apply only to luxury goods and services. (JP/Deni Ghifari)
B
usiness groups have expressed relief over a policy U-turn that averted a value-added tax (VAT) hike on Jan. 1 but called on the government to be more predictable as the last-minute decision caused widespread confusion.
Shinta Kamdani, chairwoman of the Indonesian Employers Association (Apindo) told The Jakarta Post on Thursday that the association applauded the government’s decision to apply the 12 percent VAT rate only to luxury goods and services rather than enforcing it across the board.
“This policy shows the government's sensitivity to the state of the national economy, specifically regarding public spending power, which is still in the recovery stage, and challenging businesses conditions,” she said.
The decision gave businesses the clarity needed to devise strategies for this year, particularly in projecting operational costs and consumer spending, without having to worry about a significant impact from a broad VAT increase, she noted.
She added, however, that the announcement on the policy at the turn of the year had “caused confusion on the ground”, notably for sectors that had prepared to adjust the VAT rate to 12 percent.
Read also: Govt walks back sweeping VAT hike on last day of the year
To prevent further confusion among businesses and consumers and implement the new VAT rules efficiently, the association is beseeching the government to provide clear and detailed explanations and to assure room for discussion.
