The Indonesian Chamber of Commerce (KADIN) calls on the government to postpone the planned VAT increase to 12% effective 01 January 2024.
As reported by NusaBali.com, KADIN is concerned that the 20% increase in the VAT to a 12% rate will represent a substantial burden to the general public and Indonesian businesses.
On Friday, 29 November 2024, the chairman of KADIN-Indonesia, Arsjad Rasjid, said, “We must urge the postponement of the 12% (VAT) rate in the current economic condition of Indonesia.” Adding: “When the initial decision to impose a 12 percent VAT was taken, our economic conditions were different. The situation at that time was very, very different.” The decision to increase the VAT rate from 10% to 12% was made three years ago.
In addition, the current global economic conditions are characterized by a very high level of geopolitical tension. Meanwhile, the purchasing power in the United States is currently declining.
KADIN insists the VAT cannot be increased without threatening the underlying stability of the Indonesian economy.
“When the 12 percent VAT was decided, our economic conditions were different. The situation at that time was very, very different. The situation is very different from when the 12 percent VAT decision was made approximately three years ago,” said Arsjad Rasjid.
In addition, the current global economic conditions are very high geopolitical tension, and purchasing power in the United States is declining.
KADIN used the occasion to urge the government to take firm action to limit smuggling and illegal imports that wreak damage on the national economy.
Luhut Binsar Pandjaitan
Meanwhile, the National Economic Council (DEN) chairman, Luhut Binsar Pandjaitan, has announced that the government plans to delay the 01 January 2025 introduction date for the higher VAT. Luhut said the postponement would allow the government first to introduce stimulants and incentives extended as social assistance to the middle class.
The exact nature and details of the proposed social assistance programs and how these programs will be funded have yet to be disclosed.
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