Headline: Indonesia‘s National Food Agency Clarifies Upcoming PPN Changes, Ensuring No Tax Hike on Key Domestic Rice
Subheadline: Rice consumers can breathe easy as the government ensures no tax increase on locally produced staple, targeting only imported and premium varieties.
Article:
The Indonesian government has moved to reassure consumers that its plan to increase the Value Added Tax (PPN) from 11% to 12% next year will not affect locally produced staple rice. The National Food Agency (NFA) confirmed that rice will remain exempt from the tax hike, with only certain imported and premium varieties set to be impacted.
Arief Prasetyo Adi, head of the NFA, explained that the PPN increase will not apply to strategic staple foods, particularly domestic rice. He clarified that the 12% tax will only be applied to specific imported rice types, mainly those intended for commercial use, such as in hotels and restaurants.
"Only special imported rice, like that used for hotels or restaurants, will face the 12% PPN. For instance, premium rice is typically imported because it can’t be produced locally. However, we’re ensuring that local aromatic rice varieties are tax-exempt to support our farmers," Adi stated in a written statement.
The qualification of rice types is defined in the National Food Agency Regulation No. 2/2023, which categorizes rice into general, premium, and medium grades based on milling quality and broken grains.
In line with this, the NFA has proposed to the Ministry of Finance that the PPN increase should only apply to certain imported rice types not produced domestically, as per Article 3(5) of Perbadan 2/2023.
Adi further highlighted the popularity and widespread distribution of premium rice, stating that it’s not considered a luxury good and will remain exempt from the PPN increase. Additionally, he revealed that the government plans to distribute medium-quality, high-standard rice through the Food Logistics Agency (Bulog) to 16 million low-income households starting January and February next year.
In a broader context, the government has announced a stimulus package to counterbalance the PPN increase, including a rice assistance program for 16 million beneficiaries. Each month, Perum Bulog will distribute 160,000 tons of rice to these recipients, as mandated by the NFA.
The number of beneficiaries has been adjusted to reflect a decrease in the poverty rate, which stood at 25.22 million people in March 2024, down from 26.81 million in March 2023. The program will target the poorest and most vulnerable segments of society, including the elderly and female household heads living in poverty.
Other related programs, such as the Free Nutritious Meal program and the Rice Price Stabilization and Supply Support program, will continue to run in 2025. The latter program will distribute 150,000 tons of rice monthly in January and February.
Watch this video for more info: Government Allocates IDR 265.6T for PPN Incentives on Basic and Educational Materials
(Rrd/rrd)
