Value Added Tax (VAT) is planned to increase to 12 percent starting Wednesday, January 1, 2025. The rate increase is stipulated in Law Number 7 of 2021 concerning Harmonization of Tax Regulations (HPP Law). The current VAT rate in effect since April 1, 2022 is 11 percent. So, what goods are affected by the VAT increase and which are exempted?
List of Items and Services Not Subject to VAT
Based on Article 4A of the VAT Law, the types of goods that are not subject to VAT are certain goods in the following groups of goods:
- Food and beverages served in hotels, restaurants, restaurants, stalls, and the like, including food and beverages, whether consumed on the spot or not, including food and beverages delivered by catering services.
- Money, gold bullion for the benefit of the country's foreign exchange reserves, and securities.
- Religious services, arts and entertainment services, services provided by the government, parking lot services, and catering services.
In addition, there are certain types of goods and services that can be exempted from the imposition of VAT in the context of national development, including:
- Basic necessity goods that are urgently needed by the people
- Certain medical health services and those in the national health insurance program (JKN) system.
- Social services, financial services, insurance services, education services, public transportation services on land and water as well as domestic air transportation services and labor services.
Furthermore, referring to Law Number 42 of 2009 concerning the Third Amendment to Law Number 8 of 1983 concerning Value Added Tax on Goods and Services and Sales Tax on Luxury Goods, VAT is imposed on:
- Delivery of taxable goods (BKP) within the customs area carried out by entrepreneurs.
- Import of taxable goods.
- Delivery of taxable services (JKP) within the customs area performed by entrepreneurs.
- Utilization of intangible taxable goods from outside the customs area within the customs area.
- Utilization of JKP from outside the customs area within the customs area.
- Export of tangible taxable goods by taxable entrepreneurs.
- Export of intangible taxable goods by a taxable entrepreneur.
- Export of JKP by taxable entrepreneurs.
Some examples of products that are subject to VAT are bags, clothes, shoes, automotive products, electronic devices, telecommunications pulses, tools, beauty products, and cosmetics. In addition, music and movie streaming services are also targeted for VAT imposition, such as Spotify and Netflix.
Source: Tempo.co
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