Indonesia on Monday announced economic measures to soften the blow of an increase in the value-added tax rate, including electricity tariff cuts, incentives for labour-intensive industries, and VAT exemption on some property sales.
The government said it would increase VAT to 12% from the current 11% in January 2025, applicable to certain goods and services, including premium quality rice, meat and fish, and international schools and some hospitals.
It will exempt from VAT certain staple foods, while cheap cooking oil provided by the government and sugar for industry will not be subjected to the increased rate, senior economic minister Airlangga Hartarto told a press conference.
Fiscal incentives will also be offered to the property and automotive sectors, he said.
For middle-income households, the government would reduce the electricity tariff by 50%.
The government also said it will not collect income tax from employees in labour-intensive industries whose monthly salaries are below 10 million rupiah ($624.61).
The government would also extend tax incentives for electric vehicles and give new tax incentives for hybrid EVs.
($1 = 16,010.0000 rupiah)
