Kadin: The PPN 12 For Luxury Goods Is Intended To Preserve The Purchasing Power Of The Public

ANTARA FOTO/Aprillio Akbar/aww

Kadin: The PPN 12 For Luxury Goods Is Intended To Preserve The Purchasing Power Of The Public

Friday, 03 Jan 2025

The Vice Chairman of the Coordinating Board for Organization, Law, and Communication of the Indonesian Chamber of Commerce and Industry (Kadin), Yukki Nugrahawan Hanafi, stated that the implementation of a 12 percent Value Added Tax (VAT) exclusively on luxury goods and services is a government initiative aimed at preserving the purchasing power of the public.

Yukki expressed that as a representative organization for the national business community, Kadin Indonesia welcomes the implementation of the 12 percent VAT rate, which will only apply to luxury items. This ensures that the previous 11 percent VAT rate remains applicable to non-luxury goods and services, while a 0 percent VAT will be maintained for essential commodities.

"We view this as a positive effort by the government to sustain purchasing power and domestic consumption, as a significant portion of national economic growth is derived from consumer spending," Yukki remarked in Jakarta on Wednesday.

According to Yukki, this policy also represents a strategic response by the government to external economic uncertainties anticipated in 2025, particularly concerning the potential escalation of trade tensions between the United States and China, geopolitical conflicts, and the ongoing impacts of high interest rates set by the Federal Reserve.

Furthermore, the business community perceives this government policy as a crucial measure to maintain economic stability and resilience domestically.

On another note, Kadin Indonesia appreciates the ongoing government incentives for businesses and the public, which not only support domestic consumption but also provide significant encouragement to strategic sectors, including micro, small, and medium enterprises (MSMEs), which are vital to the national economy.

"We hope that the business sector, especially in manufacturing and MSMEs, can regain momentum with the preservation of domestic consumption and the incentives provided by the government," he added.