Jakarta -The government has set the value-added tax (VAT) rate increase to 12%. This policy only applies to luxury goods.
This policy is regulated through the Minister of Finance Regulation (PMK) 131 of 2024 concerning the Treatment of VAT on the Import of Taxable Goods, Delivery of Taxable Goods, Delivery of Taxable Services, Utilization of Intangible Taxable Goods from Outside the Customs Area within the Customs Area, and Utilization of Taxable Services from Outside the Customs Area within the Customs Area.
The policy will take effect on January 1, 2025. Referring to Article 5, businesses that impose VAT on end consumers for luxury goods sales still apply the basic VAT rate of 11% during this month. Meanwhile, the 12% VAT rate will fully apply to luxury goods starting next month.
“Starting from January 1, 2025, to January 31, 2025, the Value Added Tax payable is calculated by multiplying the 12% (twelve percent) rate by the Tax Base, which is another value of 11/12 (eleven twelfths) of the selling price; and starting from February 1, 2025, the provisions as referred to in Article 2 paragraph (2) shall apply,” reads Article 5, quoted on Thursday (January 2, 2025).
Article 2, paragraph 2 explains that the luxury goods tax (PPN) is calculated by multiplying the 12% rate by the Tax Base (DPP), which is the selling price or import value. The category of luxury goods refers to items that are included in the list of objects subject to the Luxury Goods Sales Tax (PPnBM).
Thus, the VAT calculation scheme that considers the transaction value in the form of the selling price for goods transactions, reimbursement for service transactions, import value for imported goods transactions, and other values for goods or service transactions:
a. 12% x DPP = 12% x (12%/12% x transaction value); and
b. 12% x DPP = 12% x (11%/12% x transaction value).
