Indonesia braces for VAT hike as government signals green light amid public opposition
As the tax increase draws near, businesses are notifying their customers of the inevitable pricing adjustments
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[JAKARTA] The Indonesian government appears poised to push ahead with a controversial hike in value-added tax (VAT) to 12 per cent from 11 per cent, starting January next year, with President Prabowo Subianto expected to confirm the decision next week.
Recent remarks from key officials in Prabowo’s administration, including Finance Ministry advisers and lawmakers, strongly indicate the increase will proceed despite widespread opposition.
Parjiono, special adviser to the minister of finance, stated this week that the hike aligns with existing laws mandating a VAT rise by 2025, and preparations are under way to roll out subsidies to mitigate its impact on public purchasing power which remains a “priority”.
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