The government has officially provided information on changes in the VAT or Value Added Tax rate from 11% to 12% starting January 1, 2025. The increase in the VAT rate is stated in Law Number 7 of 2021 concerning the Harmonization of Tax Regulations (UU HPP).
Before discussing the increase in VAT further, do you understand value-added tax? If not, please review the definition below.
What is VAT, and How Much is the Rate?
The VAT, or Value Added Tax rate, is an indirect tax imposed on all taxpayers, both individuals and corporate taxpayers, who have been registered as taxable entrepreneurs or PKP for all transactions of buying and selling goods or services.
So, who is required to collect, deposit, and report VAT? Traders or retailers carry out all of these activities. Although consumers are required to pay VAT rates in daily practice, the company is responsible for making deposits and also reporting related to the VAT obtained to the state.
List of Goods and Services Subject to VAT
Generally, the 12% VAT rate is only imposed on certain luxury goods and services subject to Luxury Goods VAT (PPnBM). According to Government Regulation Number 61 of 2020, two groups of luxury goods are subject to PPnBM, namely motor vehicles and goods other than motor vehicles. The imposition of PPnBM on motor vehicles is regulated in PMK Number 141/PMK.010/2021, which was later amended by PMK Number 42/PMK.010/2022
Meanwhile, the imposition of PPnBM for goods other than motor vehicles is divided into four groups referring to PMK Number 15/PMK.03/2023, as follows;
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Luxury Residential Group
- Such as luxury homes, apartments, condominiums, townhouses, and the like with a selling price of IDR 30 billion or more
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Ballet and bullet group
- Ballet and balloon groups that can be steered by other aircraft without propulsion.
- Group of firearms and other firearms, except for state purposes: Bullets and parts thereof, excluding air rifle bullets
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Group of aircraft and firearms
- Group of other aircraft except for state purposes or commercial air transportation such as helicopters
- Group of firearms and other firearms, except for state purposes
- Group of firearms (other than artillery, revolvers, and pistols) and similar equipment operated by shooting explosives.
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Group of luxury cruise ships
- This does not apply to luxury cruise ships for state purposes or public transportation such as:
- Cruise ships, excursion ships, and similar water vehicles, especially those designed for the transportation of people, ferries of all types, except for state purposes or public transportation
- Yachts, except for state purposes, public transportation, or tourism businesses
- This does not apply to luxury cruise ships for state purposes or public transportation such as:
Implementation of 12% VAT Calculation
After understanding the definition of VAT and the goods and services affected by its increase, we will simulate the application of the 12% VAT calculation. There are two ways to calculate the application of the 12% VAT calculation.
Calculation for luxury goods. For the import of luxury goods, the VAT calculation formula is 12% x import value. For the delivery of luxury BKP, the VAT formula is 12% x selling price. For the delivery of luxury BKP (Taxable Goods) to end consumers with retail tax invoices, until January 31, 2025, VAT is calculated (12% (11/12 x selling price), and starting February 1, 2025, the VAT rate applies 12% selling price.
Calculation for goods other than luxury goods and for services and intangible goods. For the import of BKP, the VAT calculation is 12% x (11/12) x import value). For the delivery of JKP and the use of BKP TB/JKP from outside the customs area within the customs area, the VAT calculated is 12% x (11/12) x replacement), and for exports, it is charged 0%
That is the discussion regarding the information on the 12 percent VAT rate policy, which will be effective starting January 1, 2025. To read other articles about interesting financial tips, you can visit the Bank MAS website blog here
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