Jakarta. The Center for Indonesia Taxation Analysis (CITA) criticized the government for prioritizing the VAT hike while three other taxes outlined in the Harmonized Tax Regulations Law (UU HPP) remain unimplemented.

Ruben Hutabarat, Deputy Director of CITA, pointed out that there are three specific tax measures within the UU HPP that have yet to be enforced, including the carbon tax, sugar-sweetened beverage excise tax, and income tax on electronic commerce transactions. According to Ruben, the government should not overlook these taxes while focusing on the VAT increase.

"However, it is important to note that within the UU HPP, there are other taxes that the government has yet to implement, although the tax subjects are different. For instance, the carbon tax, sugar excise, and income tax on electronic trading," Ruben told IDTV on Monday.

He argued that if the government’s intent is to fully implement the UU HPP, these three taxes should also be actively pursued. He cautioned that the current focus on VAT could give the impression of favoritism towards certain tax subjects, given that the subjects of the three unimplemented taxes differ from the broad impact of the VAT increase.

"VAT will target nearly all segments of the Indonesian population," he added.

As previously reported, the government is set to raise the VAT rate to 12 percent starting in January 2025. The increase is part of a phased adjustment under the UU No. 7/2021 on Harmonizing Tax Regulations (HPP). The VAT rate has already risen incrementally from 10 percent in 2020 to 11 percent in April 2022, and is scheduled to reach 12 percent by January 2024.

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