VAT Rate to Increase to 11% on 01 April

The Indonesian Chamber of Commerce and Industry (KADIN) is voicing its support for government plans to increase the VAT Tax rate from 10% to 11%, effective 01 April 2022. reports the increase in the VAT rate is in accordance with Law Number 7 of 2021 on the Harmonization of Tax Regulations.

Kadin is quietly accepting the tax hike.

The chairman of Kadin, Arsjad Rasjid, speaking in a press conference on Tuesday, 15 March 2022, said: “The global commercial situation is not conducive and impacts the increase in global inflation. Nonetheless, Kadin Indonesia is an organization that accommodates the business actors from various sectors in Indonesia. Because of this, Kadin always cooperates with the government to create a conducive, healthy, and competitive business climate.”

Arsjad continued, saying that the increase in the VAT represents an effort by the government to increase State revenues and bring the State budget deficit and expenditures to a maximum of 3% of the GNP by 2023. He said the public’s support for the tax hike reflects a cooperative spirit to justly and equitably pay the development cost and restore the national economy.

Arsjad explained that the inflation rate in Indonesia now impacting basic goods and materials is not caused by the increase in the VAT rate. Adding: “The increase in the cost of basic materials is linked to the unstable global political situation caused by the Russian-Ukraine conflict.”

Arsjad said that global logistical chains have been disrupted by the COVID pandemic and higher prices for raw materials. 

Arsjad said that Kadin is recommending to the government all basic goods, education services, health services, social services, and other strategic economic activities continue to receive VAT exemptions.”