VAT Raises to 11% Starting April 2022

The government has increased VAT rate from 10 percent to 11 percent starting Friday, April 1, 2022. This provision is contained in Law Number 7 of 2021 concerning Harmonization of Tax Regulations (UU HPP). The Directorate General of Taxes ensured this VAT rate adjustment was also accompanied by a reduction in PPh rate on income up to Rp 60 million to 5 percent, tax exemptions for MSME actors with a turnover of up to Rp. 500 million, final VAT facilities with a certain smaller amount (1%, 2% or 3%), and accelerated VAT restitution services of up to Rp 5 billion.

Certain goods and services are still provided with VAT-free, such as

  • Staple goods
  • Health/education/social/financial/public transport/labor services
  • Vaccine, textbooks, and scriptures
  • Clean water
  • Electricity (except > 6600 VA)
  • Simple flats
  • Construction services for place of worship and natural disasters
  • Machinery, marine fishery products, livestock, seeds/seeds, animal feed, fish feed, feed ingredients, raw hides and skins, silver handicraft raw materials
  • Petroleum, natural gas, and geothermal
  • Gold bullion and granulated gold
  • Defense and aerial photography equipment.