Jakarta. The upcoming 12 percent value-added tax or VAT would apply to luxury goods and services which would include premium beef and elite schools, the government announced Monday.

Indonesia will officially raise the VAT from the current 11 percent to 12 percent starting in January 1 as mandated by the 2021 taxation law.

Goods that will be subject to the 12 percent VAT are those that classify as premium food ingredients. This includes premium rice, fruits, fish, meat such as wagyu beef and salmon. The government will also impose the 12 percent VAT on premium healthcare services and elite schools. Houses with high electric consumption of between 3,500 and 6,600 volt-amperes will be subject to the updated VAT.

Chief Economic Affairs Minister Airlangga told reporters that the updated VAT was part of the government's tax reforms to ensure fairness and optimize state revenue. The government will also make staple goods and public transportation VAT-free. The same goes for healthcare services, education, polio vaccines, insurance, and utility bills. The government will also cover 1 percent of the VAT burden for MinyaKita, the affordable cooking oil intended for low-income families. 

"We have prepared economic stimulus packages for families of different income classes to make sure that the Indonesian people remain prosperous," Airlangga told the press.

The government will also set aside Rp 265.6 trillion (approximately $16.6 billion) in state budget to roll out the VAT incentives for the entirety of 2025.

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