The Asian archipelago has decided to raise VAT on luxury goods and services such as private jets, luxury yachts, cruise ships and other luxury homes by one point to 12%. A way for the new President to cope with his ambitious social spending program.
A crackdown on luxury goods in Indonesia…
At an online press conference held in Jakarta on December 31, Indonesian President Prabowo Subianto declared that the increase in the value-added tax (VAT) rate by one percentage point to 12% from January 1, 2025 would apply onlyto luxury goods and services.
Initially envisaged for other product categories under tax legislation adopted in 2021, this VAT increase in the Asian archipelago will ultimately target only products “such as private jets, luxury yachts, cruise ships, luxury homes above the median income level”, i.e. “items consumed by the wealthiest segments of society”, said Prabowo Subianto.
Other goods and services remain subject to the current VAT rate of 11%, while the VAT exemption for products (rice, meat, fish, eggs, vegetables, fresh milk) and services (education, healthcare, public transport and basic housing) of basic necessity is still in force.
Help for needy households
A previous announcement by the Indonesian government, to the contrary, had led to panic in a context of rising living costs.
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