Increase in Indonesia VAT Rate to 11% Effective 1 April 2022

Increase in Indonesia VAT Rate to 11% Effective 1 April 2022

The Indonesian Government plans to increase the VAT rate in the country to 11% effective 1 April 2022. The increase is in accordance with the Harmonisation of Tax Regulations, Law Number 7.

The 11% VAT rate increase is reflective of the Indonesian Government’s efforts to increase State revenue. The aim is to bring the State’s expenditures and budget deficits to a maximum of 3% by 2023. The public support for this only reflects the cooperative spirit of the nation to help restore the national economy.

Indonesia has experienced a rise in inflation rates that is impacting the materials and basic goods sector. However, this is not because of the VAT increase. The increase, instead, is linked to the current Russian-Ukraine conflict. It has caused an unstable political situation globally, hence the rise in the cost of basic goods and materials.

The Covid-19 pandemic has also caused a rise in the prices of raw materials.

You can follow us for more latest news on taxation in Indonesia.