VAT Will Increase To 11 Percent, How Will It Affect The Economy?

Value Added Tax (PPN) will increase from 10 percent to 11 percent starting April 1, 2022. The increase in VAT rates follows the ratification of the Harmonization of Tax Regulations (HPP).

Responding to this, the Director of the Tax Research Institute, Prianto Budi Saptono, said the 11 percent VAT rate was a middle way to increase state revenue amid the Covid-19 pandemic situation. This government policy is also considered as part of the government’s strategy to optimize state revenues due to the continued decline in the tax ratio.

Data from the Directorate General of Taxes at the Ministry of Finance, in 2012 the national tax ratio was still at 14 percent. However, this figure continued to decline until last year. Even since 2019, Indonesia’s tax ratio has always been below 10 percent, which is 9.76 percent in 2019, then 8.33 percent in 2020, and last year it started to increase again to 9.11 percent.

Prianto added that the current rapid pace of the digital economy has more or less influenced the government’s policy of choosing to intensify VAT. He highlighted how international technology giant companies are now fond of doing tax planning in order to get a tax treaty or double tax avoidance (P3B) approval.

Although this policy can reap positive or negative feedbacks from the public, for the time being this policy is urgently needed by Indonesia, especially because Indonesia must quickly recover from the bad economic situation from the pandemic that occurred in recent years. It is hoped that this policy will increase the ratio of state income again.

SOURCE          :           Kompas (

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