DIGIVESTASI - The Value Added Tax (VAT) in Indonesia will increase from 11 percent to 12 percent starting January 1, 2025. With this increase, Indonesia's VAT will surpass several Asian countries such as Japan and South Korea, which apply a VAT rate of 10 percent. In fact, countries such as Australia also only charge a VAT of 10 percent, while Switzerland is only 7.7 percent and Canada is 5 percent.

The increase in VAT to 12 percent has been regulated in the Harmonization of Tax Regulations Law (HPP Law) and will be enforced by the new government. The Coordinating Minister for Economic Affairs, Airlangga Hartarto, has hinted that this increase is likely to happen next year, although he did not provide specific details on the amount of the increase. He said the next government will continue the policies that were passed during President Jokowi's administration.

The Director of Counseling, Services, and Public Relations of the Directorate General of Taxes of the Ministry of Finance, Dwi Astuti, stated that the implementation of the VAT increase will follow the new government's direction. She also emphasized that although Indonesia's VAT rate has increased, it is still lower than several other countries that have higher VAT rates.

Based on the *Consumption Tax Trends 2022* report from the Organization of Economic Co-operation and Development (OECD), the average VAT rate as of 31 December 2022 reached 19.2 percent worldwide. Some developed countries even apply VAT rates much higher than Indonesia, in line with the quality of their public services.

In Law Number 7 of 2021, a number of goods and services are exempted from the imposition of VAT. Some of them are food and beverages served in hotels, restaurants, restaurants, and stalls, which are already the object of Regional Tax and Regional Retribution (PDRD). In addition, money, gold bars for state foreign exchange reserves, and securities are also exempt from VAT.

In addition to goods, a number of services are also exempt from VAT, including religious services, arts, entertainment, hospitality, catering, and parking lot services, which are also PDRD objects under local government regulations.

Here are some VAT rates in a number of countries based on OECD data for 2022:

- Hungary: 27 percent
- Denmark, Sweden, Norway: 25 percent
- Finland, Greece, Iceland: 24 percent
- Ireland, Poland, Portugal: 23 percent
- Italy, Slovenia: 22 percent
- Latvia, Netherlands, Belgium, Spain: 21 percent
- Austria, Estonia, France, United Kingdom: 20 percent
- Germany, Chile, Colombia: 19 percent
- Turkey: 18 percent
- Luxembourg: 17 percent
- Mexico: 16 percent
- New Zealand: 15 percent
- Japan, South Korea, Australia: 10 percent
- Switzerland: 7.7 percent
- Canada: 5 percent.

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