Indonesia's Finance Minister Purbaya Says "Too Early" to Recalculate VAT Rates

4 hours ago 4

October 20, 2025 | 10:32 pm

TEMPO.CO, Jakarta - Finance Minister Purbaya Yudhi Sadewa said it's still too early to recalculate the value-added tax (VAT) rates, during a meeting with fund managers from several asset management firms.

According to Purbaya, one of the questions raised by the fund managers is the reduction of the VAT rate. But he said on Monday that the ministry is not in a position to calculate the VAT rates, since he "doesn't yet know the conditions of taxes and customs after we fix them."

Purbaya said that the government is still focused on stabilizing tax and customs revenues, and only then would the government consider other necessary measures.

The Ministry of Finance noted that by the end of September 2025, state revenue reached Rp1,863.3 trillion or 65 percent of the set outlook. This figure is lower than the same period last year, at Rp2,008.6 trillion.

Revenue consists of taxation, amounting to Rp1,516.6 trillion, with a contraction of 2.9 percent. Tax revenue amounted to Rp1,295.3 trillion, while customs revenue amounted to Rp221.3 trillion.

In early 2025, former Finance Minister Sri Mulyani Indrawati signed a Minister of Finance Regulation (PMk) to raise VAT rates from 11 to 12 percent. The regulation officially took effect on January 1, 2025.

The policy regulates that 12 percent VAT is imposed on luxury goods. Referring to article 2 paragraph 3 of this regulation, the category of goods subject to 12 percent VAT includes motor vehicles and other than motor vehicles subject to luxury goods sales tax (PPNBM).

Previously, Sri Mulyani announced the cancellation of the VAT increase for a number of goods and services. Initially, the government only exempted three items from the 12 percent VAT, namely Minyakita cooking oil, flour, and industrial sugar.

Ilona Estherina contributed to the writing of this article

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