List and Simulation of 12% VAT Calculation for Luxury Goods

https://epajak.or.id/ List and Simulation of 12% VAT Calculation for Luxury Goods Effective New Year 2025

Indonesian President Prabowo Subianto emphasized that the increase in Value Added Tax (VAT) from 11% to 12%, which took effect on Wednesday (1/1/2025), does not apply to people’s basic needs. Goods such as rice, meat, soap, detergent, airtime, and streaming services remain free from this increase. This statement is in line with a regulation that has also just been issued, namely Minister of Finance Regulation (PMK) Number 131 of 2024.

This policy aims to maintain the purchasing power of the general public, while directing fiscal policy towards goods and services categorized as luxury goods.

This tariff increase is only imposed on certain goods categorized as luxury goods, in accordance with Minister of Finance Regulation (PMK) No. 42/2022 and PMK 15/2023. This regulation updates PMK 141/2021 which regulates the types of taxable goods (BKP) of motor vehicles and PMK No. 96/2021 which regulates the types of BKP other than motor vehicles, which are subject to Sales Tax on Luxury Goods (PPnBM).

Read Also: Implementation of PMK 131/2024: New VAT Rate for Luxury Goods in 2025

Categories of Luxury Goods Subject to 12% VAT

Referring to PMK 42/2022 and PMK No. 15/2023, the following types of luxury goods and services are subject to a 12% VAT rate:

Motorized Vehicles for Transportation of Less than 10 People

Motorized vehicles with internal combustion engines with a cylinder capacity of not more than 3,000 cc, including hybrid types.
Motor vehicles with compression-ignition internal combustion engines (diesel or semi-diesel) with a cylinder capacity of up to 3,000 cc, including hybrid types.
A motor vehicle with a spark ignition internal combustion engine with a cylinder capacity between 3,000 cc and 4,000 cc, including hybrid type.
A motor vehicle with a compression-ignition internal combustion engine (diesel or semi-diesel) with a cylinder capacity of 3,000 cc to 4,000 cc, including hybrid types.
Motorized vehicles based on fully electric motors.

Motorized Vehicles for Transportation of 10-15 People

Motor vehicles with spark ignition internal combustion engines of up to 4,000 cc, including hybrid types.
Motor vehicles with a compression-ignition internal combustion engine (diesel or semi-diesel) with a cylinder capacity of up to 4,000 cc, including hybrid types.
A motor vehicle powered entirely by an electric motor.

Double-cabin motorized vehicles

Double-cabin motor vehicles with spark-ignition engines (GVW up to 5 tons), including hybrids and electric motors.
Double-cab motor vehicles with a compression-ignition engine (diesel or semi-diesel) with a GVW of up to 5 tons, including hybrid and electric motors.
Double-cabin motor vehicles powered entirely by electric motors, with a GVW of up to 5 tons.

Other types of motor vehicles

Golf carts (including golf buggies) and similar vehicles.
Specialized vehicles for travel on snow, beaches, mountains, or similar terrain.
Two- or three-wheeled vehicles with an internal combustion engine with a cylinder capacity between 250 cc and 500 cc.
Two- or three-wheeled vehicles with an internal combustion engine with a cylinder capacity of more than 500 cc.
Caravan-type trailers and semi-trailers for housing or camping.
Motor vehicles with a cylinder capacity exceeding 4,000 cc.

Goods and Property Other than Motor Vehicles

Luxury residences such as houses, apartments, condominiums, and town houses with a minimum selling price of IDR 30 billion.
Hot air balloons and other aerial vehicles without propulsion.
Firearms and other firearms (other than for state purposes), including bullets except for air rifle bullets.
Helicopters and other aerial vehicles (except for state purposes or commercial transportation).
Firearms and such equipment operated with explosives, including artillery guns, revolvers, and pistols.
Yachts, yachts, excursion boats, and similar water vehicles (except for state use or commercial transportation).

These goods are subject to STLG rates that vary between 20% to 75%, depending on the category and function of the goods.

read also

• PNBP Reform at the Ministry of Law and Human Rights
• Understanding Mutual Agreement Procedure
• Effects of Luxury Goods VAT Increase on Capital Market Transactions
• PMSE VAT
• Adjustment of Tax Rates in Capital Market

Simulation of Luxury Goods Tax Calculation

As an illustration, let’s simulate the tax calculation for a luxury condominium with a selling price of IDR25 billion:

When VAT Rate is 11% (Before Increase)
Tax imposition base (DPP): IDR25,000,000,000
VAT (11%): 11% × Rp25,000,000,000 = Rp2,750,000,000
PPnBM (20%): 20% × Rp25,000,000,000 = Rp5,000,000,000
Total Price After Tax: Rp25,000,000,000 + Rp2,750,000,000 + Rp5,000,000,000 = Rp32,750,000,000

When VAT Rate is 12% (After Increase)
Tax imposition base (DPP): Rp25,000,000,000
VAT (12%): 12% × Rp25,000,000,000 = Rp3,000,000,000
PPnBM (20%): 20% × Rp25,000,000,000 = Rp5,000,000,000
Total Price After Tax: Rp25,000,000,000 + Rp3,000,000,000 + Rp5,000,000,000 = Rp33,000,000,000,000

With the increase in VAT rate from 11% to 12%, there is a price difference of Rp250 million. This difference is equivalent to a 0.76% increase in the total price of the goods after tax.

Economic Impact and Policy Objectives

According to economic experts, the VAT rate increase is designed to strengthen state revenue without burdening the small community. Luxury goods were chosen as the object of the increase because consumers in this segment are considered to have high purchasing power, so they are not significantly affected by the tax increase.

One fiscal analyst mentioned that this policy is also expected to reduce economic inequality. By imposing higher taxes on luxury goods, the government seeks to balance the national tax structure.

Read also: Full List of 2025 Economic Stimulus Incentives in the Face of 12% VAT

Projections and Implications for Consumers

Consumers of luxury goods such as property developers or high-income individuals will need to factor this increase into their spending plans. For developers, price adjustments on luxury properties may also affect product competitiveness in certain markets.

However, some observers note that this tax increase may not significantly affect the sales volume of luxury goods, given the segment’s relatively small market share compared to basic necessities.

The increase in the VAT rate to 12%, which will take effect in early 2025, demonstrates the government’s efforts to strategically manage state finances while protecting the purchasing power of the general public. This policy focuses on imposing higher rates on luxury goods and services, as one of the measures to support fiscal sustainability and economic equity.