https://epajak.or.id/ Adjustment of Tax Rates in Capital Market due to 12 Percent VAT Increase, Starting January 2025, Indonesia’s taxation policy features a number of adjustments. Although the Harmonization of Tax Regulations (HPP) Law previously stipulated an increase in Value Added Tax (VAT) from 11 percent to 12 percent, the government through President Prabowo Subianto’s official statement, accompanied by the issuance of PMK No.131 of 2024, confirmed that the 12 percent VAT rate only applies to luxury goods. Other goods and services that are not classified as luxury goods are still subject to 11 percent VAT as in effect since 2022.
IDX Explanation on 12 Percent VAT in the Capital Market
The Indonesia Stock Exchange (IDX) has previously issued a Circular Letter regarding the adjustment of the VAT rate effective January 1, 2025. IDX Director of Trading and Exchange Member Regulation, Irvan Susandy, explained that the 12 percent VAT rate is calculated based on the tax object value of 11/12 of the invoice value, resulting in an effective rate equivalent to 11 percent VAT.
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Irvan added that this tax burden will be applied to Exchange Members (AB), which will later pass on the burden to customers. In addition, similar rules also apply to issuers, where all transactions on the exchange will be subject to the same rate according to this new mechanism.
Presidential Confirmation on Luxury Goods
President Prabowo Subianto on December 31, 2024 clarified that the VAT rate increase to 12 percent only applies to luxury goods and services. Luxury goods include private jets, yachts, and luxury homes. Services that are not classified as luxury goods will still be subject to the 11 percent VAT rate.
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Market Reaction and Impact on Investors
Market participants seem to welcome this adjustment, as the previously feared impact of the VAT increase turned out to be insignificant. Hendra Stevin from NH Korindo Sekuritas stated that investors’ attention is more focused on monetary policy and market movements than the VAT rate change.
Even so, the rate adjustment will still have an impact on the transaction cost structure. The Indonesia Stock Exchange and Indonesia Central Securities Depository (KSEI) continue to coordinate with regulators to ensure the transition of this policy runs smoothly.
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Education and Proactive Steps
IDX urges market participants to understand the details of this change in order to anticipate its impact. The Exchange and KSEI will continue to educate exchange members, issuers, and customers, ensuring market stability is maintained.
This policy reflects the government’s efforts to maintain a balance between state tax revenues and the attractiveness of investment in the Indonesian capital market. Market participants are expected to continue to prepare for these changes with proactive steps to maintain smooth operations and investment competitiveness.