Generally, tourism services and products will not be directly impacted by current plans to increase the Value-Added-Tax (VAT) to 12% effective 01 January 2024. However, the planned 20% increase in VAT from 10% to 12% will be felt by workers in the tourism sector by the resulting increase in the cost of consumer goods.
As reported by BaliPost.com, the Chairman of the Badung Chapter of The Tourism Workers Union (FSP-Badung), Slamet Suranto, said on Friday, 22 November 2024, that the increase in the VAT will affect the tourism workers’ economy. The VAT increase will be felt in the price of consumer goods and services, creating a “domino effect” throughout the general economy. “Workers, as members of the general public, must purchase clothing, shoes, and other items. We still need these items. The VAT increase will significantly impact workers,” explained Suranto.
The specifics of plans to increase the Regional Minimum Pay Rate (UMP/UMK 2025) have yet to be promulgated. Nonetheless, Suranto, speaking on behalf of his union members, said he hopes that the UMK will increase by at least 10% to offset the planned sales/VAT tax increase to 12%.”
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