Headline: Indonesia‘s PPN Hike: What You Need to Know About the 12% Tax on Luxury Goods and Services
Jakarta, CNBC Indonesia – The Indonesian government has confirmed that it will proceed with the planned increase in Value Added Tax (VAT) to 12% for certain luxury goods and services, effective January 1, 2025. Minister of Finance Sri Mulyani Indrawati has clarified that this tax hike will only apply to a select group of luxury services, while the current 11% VAT rate will remain for other services.
In a press conference held in Jakarta, Sri Mulyani stated, "Only a handful of luxury services will face the 12% VAT increase. The majority of goods and services, which are currently taxed at 11%, will remain unchanged. The 12% rate will only apply to very luxurious items as outlined in PMK 15/2023."
As a reminder, PMK No 15/2023 updates the list of luxury goods subject to the Luxury Goods Sales Tax (PPN mewah) and outlines the tax exemption procedures for luxury goods.
Luxury Goods and Services Subject to 12% VAT
Effective January 1, 2025, the following luxury goods and services will be subject to the 12% VAT rate, excluding motor vehicles:
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Luxury Housing: Houses, apartments, condominiums, townhouses, and similar properties with a selling price of IDR 30 billion (approximately USD 2.1 million) or more.
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Aircraft and Related Equipment: Hot air balloons, unmanned aircraft, and other aircraft without an engine.
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Ammunition and Firearms: Ammunition and firearm parts, excluding airsoft pellets.
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Luxury Aircraft: Helicopters and other aircraft, excluding those subject to a 40% tax rate and those used for state or cargo transport purposes.
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Firearms: Artillery, revolvers, and pistols.
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Other Firearms: Non-artillery, non-revolver, and non-pistol firearms that operate by firing explosives.
- Luxury Yachts: Yachts and similar vessels designed primarily for passenger transportation, excluding those used for state or public transport purposes.
