Indonesia ‘almost certain’ to defer Jan 2025 VAT, says presidential economic adviser as plans shift to stimulus
JAKARTA, Dec 1 — Indonesia’s new 12 per cent value-added tax (VAT), initially scheduled to roll out from January 1 next year, is likely to be postponed to a later date, according to presidential economic adviser Luhut Pandjaitan.
Luhut, who chairs Indonesia’s National Economic Committee, said the government has shifted its focus to introducing stimulus injections to prevent its economy from sliding, CNBC Indonesia reported today.
“Yes, it’s almost certain that it will be postponed. Let’s focus first on the electricity subsidy,” he was quoted as saying after voting in the southern Jakarta regional election.
Luhut said the government is planning to offer two to three months’ electricity subsidies to stimulate the economy before implementing the VAT hike.
He said the subsidies for low-income citizens would apply only electricity bills rather than through cash transfers to prevent misuse.
Luhut’s remarks comes days after Indonesian businesses and unions opposed the VAT hike amid surging living costs that are driving consumers to cut back on spending, resulting in a domestic economic slump.
Earlier this week, Jakarta announced a temporary measure to cut domestic airfares by 10 per cent to boost the tourism sector during year-end holidays.
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