automotive

Sri Mulyani Officially Issues New Regulation On 12 Percent VAT; Here Are The Details

Finance Minister Sri Mulyani Indrawati has officially signed the Minister of Finance Regulation (PMK) that serves as the basis for increasing the value-added tax (VAT) rate from 11% to 12%. PMK 131 of 2024 was established on December 31, 2024, and will take effect on January 1, 2025 

This regulation stipulates that a 12% VAT will be applied to luxury goods. According to Article 2, Paragraph 3 of this regulation, the category of goods subject to the 12% VAT includes motor vehicles and other items that are subject to the luxury goods sales tax (PPNBM), in accordance with the provisions of tax legislation. 

The government has established two mechanisms for calculating the VAT obligation. "From January 1, 2025, to January 31, 2025, the VAT owed will be calculated by multiplying the 12% rate by a tax base of 11/12 (eleven twelfths) of the selling price," as stated in the regulation. 

This means that during January, the VAT owed will be calculated at 12%, but based on a tax base that is 11/12 of the selling price of the goods. Starting February 1, 2025, the calculation will be based on the selling price or the import value of the goods at the 12% rate. 

Previously, Minister Sri Mulyani announced the cancellation of the VAT increase for certain goods and services. Initially, the government had exempted three items from the 12% VAT: Minyakita cooking oil, flour, and industrial sugar. 

"All goods and services that have been subject to the 11% VAT will not see any changes in the amount paid, meaning there will be no increase in VAT, and they will continue to pay the 11% VAT," Sri Mulyani stated on her Instagram account @sminrawati on January 1, 2024. 

Meanwhile, goods and services that have been exempt from VAT, such as staple foods like rice, will remain exempt from this tax. Luxury goods subject to the 12% VAT are those currently classified under the Luxury Goods Sales Tax (PPNBM). 

Outside of motor vehicles, the regulations regarding the objects subject to the Luxury Goods Tax (PPnBM) are outlined in PMK 15 of 2023, which addresses the types of taxable goods other than motor vehicles that are subject to PPnBM and the procedures for exemptions from this tax. The tax rates range from 20 to 75 percent. 

The categories of goods that are subject to the PPnBM include residential properties, such as luxury houses, apartments, condominiums, townhouses, and similar types, with a selling price of 30 billion Indonesian Rupiah or more. Additionally, items such as hot air balloons, private jets, yachts, and luxury motor vehicles are also included. 

Tag: 12 Percent VAT Sri Mulyani