JAKARTA, Jan 1 — Indonesia has begun imposing a 12 per cent Value-Added Tax (VAT) on luxury goods and services today, marking a one per cent hike, reported Xinhua.
This has reassured the public, who were previously worried that the increase would also apply to basic necessities.
The goods subject to the 12 per cent VAT included private jets, cruise ships, yachts, luxurious houses, and other items classified as luxury goods.
"For goods and services used by the general public, VAT remains exempt, applied at a zero per cent rate.
"These include basic necessities such as rice, meat, fish, eggs, vegetables, fresh milk, educational services, health services, public transportation, non-luxurious housing, and drinking water," Indonesian President Prabowo Subianto said during a virtual press conference in Jakarta late yesterday.
He added that the Indonesian government will provide a package of economic incentives to ensure that the VAT increase does not significantly impact the people's purchasing power.
By raising the VAT, Indonesia aims to boost the economy, particularly in sectors like manufacturing, trade, digital industries, and even other informal sectors.
— Bernama
