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Calculating Luxury Goods Tax After a 12% PPN Deduction

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Government Increases Value Added Tax (VAT) to 12% from 2025

The Indonesian government has officially announced an increase in Value Added Tax (VAT) from 11% to 12% effective January 1, 2025. However, this new VAT rate will only apply to luxury goods that are also subject to Luxury Goods Sales Tax (LGST). The announcement was made by President Prabowo Subianto and Minister of Finance Sri Mulyani at the Ministry of Finance office last Tuesday.

President Prabowo Subianto clarified that the VAT increase will only affect luxury goods and services, targeting those in the upper-middle and affluent classes. Four categories of luxury goods will be subject to the new 12% VAT rate:

  1. LGST 20%: Luxury housing such as villas, apartments, and townhouses priced at Rp30 billion or above.

  2. LGST 40%: Hot air balloons, other lighter-than-air aircraft, and certain types of ammunition.

  3. LGST 50%: Military aircraft, helicopters, passenger aircraft, artillery, revolvers, pistols, and other firearms.

  4. LGST 75%: Luxury yachts and other pleasure boats, except those used for public transportation or state purposes.

Yachts used for private pleasure will be subject to the 12% VAT, excluding those used for state purposes or public transportation and tourism businesses.

Calculation of Tax on Luxury Goods after 12% VAT and LGST

For instance, if a luxury house is sold at Rp30 billion, the taxes would be calculated as follows:

  • VAT: 12% of Rp30 billion = Rp3.6 billion
  • LGST: 20% of Rp30 billion = Rp6 billion
  • Total price paid by the buyer: Rp30 billion + Rp3.6 billion + Rp6 billion = Rp39.6 billion
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President Prabowo’s New Year Gift: 12% Pay Rise for Civil Servants

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President’s Gift for New Year: PPN Rate Freeze at 11 Percent

As the clock struck midnight on January 1, 2025, Indonesians welcomed the new year with the unexpected yet welcome news of a presidential gift from Prabowo Subianto. The President has decided to scrap the planned increase of the Pajak Pertambahan Nilai (PPN) rate from 12 to 11 percent.

In a press conference held on Wednesday, January 1, Coordinator Minister for Political, Legal, and Security Affairs, General (Ret.) Budi Gunawan, shared the president’s New Year message. According to him, President Subianto wished for all Indonesian citizens to receive blessings, kindness, peace, and prosperity. Thus, he chose to forgo the PPN rate hike as a special gift for the new year.

The PPN rate hike was initially announced to target only luxury goods and services consumed by higher-income individuals. Basic necessities would still be taxed at the existing 0 percent rate. This policy was met with both support and criticism, with some applauding the government’s effort to mobilize more revenue, while others argued that it would place an unfair burden on the wealthy.

president Subianto clarified in a press conference on Tuesday, December 31, 2024, that the PPN rate increase would only apply to luxury goods and services. He cited examples such as private jets, luxury yachts, and high-end lavish residences as items that would fall under this category.

Minister Gunawan expressed his confidence that this decision would alleviate citizens’ concerns and reiterated the government’s commitment to fostering a more prosperous Indonesia.

Baca Juga (Read Also):

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What Luxury Items Are Subject to 12% VAT?

by Chief Editor
written by Chief Editor

Title: Indonesia Hikes PPN on Luxury Goods to 12%

CNN Indonesia

The Indonesian government has officially announced a tax hike, increasing the value-added tax (PPN) from 11% to 12% exclusively for luxury goods. This was confirmed by President Prabowo Subianto and Minister of Finance Sri Mulyani at a press conference held at the Ministry of Finance on Tuesday (31/12).

Prabowo emphasized, "Let me clarify, the increase in PPN rate from 11% to 12% only applies to luxury goods and services, specifically those items that have been subject to luxury goods PPN in the past, primarily consumed by the upper classes."

So, what are the luxury goods now subject to a 12% PPN? Sri Mulyani outlined four categories covered by PPNBM (Indonesian Value-Added Tax Law) No. 15/PMK.03/2023. Here’s a breakdown:

1. PPnBM at 20%

  • High-end residences such as villas, luxury apartments, townhouses, or similar with a selling price of IDR 30 billion or more.

2. PPnBM at 40%

  • Items like hot air balloons and privately operated hot air balloons, other non-powered aircraft, and certain ammunition and firearms (excluding those for state purposes), such as bullets and their components, excluding those for airsoft guns.

3. PPnBM at 50%

  • Privately owned aircraft (excluding those subject to the 40% rate) such as helicopters and other aircraft, as well as luxury watercraft. Additionally, certain firearms and ammunition (excluding those for state purposes), such as artillery, revolvers, pistols, and other firearms and operationally fired explosive weapons.

Illustration. Luxury jets are among the items that will now be subject to a 12% PPN.

4. PPnBM at 75%

  • Luxury tourist yachts (excluding those for state purposes and public transportation), such as cruise ships, excursion boats, and other similar watercraft designed primarily for passenger transport, as well as ferries of all types (excluding those for state purposes and public transportation). Additionally, yachts are subject to this rate, excluding those for state purposes and commercial or tourism-related activities.

The government aims to widen the tax base and ensure fairer contributions from various segments of society. This initiative is expected to boost state revenue, while reducing the tax burden on common goods and services.

(blq/asr)

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Prabowo, Sri Mulyani’s Dual Perspectives on the 12% PPN

by Chief Editor
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Presidential Announcement: PPN Increase to 12% Affects Only Luxury Items

In a significant move, President Prabowo Subianto has decided to enforce an increase in the Value Added Tax (VAT) rate from 11% to 12% only for luxury items,ercising a restraint that satisfies the spirit of Law No. 7/2021 regarding the Harmonization of Fiscal Laws.

Targeted Items: Barang Mewah

The president clarified that the VAT increase will apply solely to luxurious goods and services, specifically those currently classified as Barang Mewah, or luxury goods, that are consumed by the wealthy. Items that qualify include:

  1. Luxury vehicles, such as private jets
  2. High-end watercraft like yachts
  3. Upscale residential properties with prices exceeding Rp30 billion

Minister of Finance Sri Mulyani also detailed the specific luxury items affected, which include:

  • High-end housing, such as luxury homes, apartments, and townhouses
  • Luxury aircraft and watercraft, like helicopters and yachts
  • Expensive weapons and ammunition
  • Luxury goods and services

No Impact on Essential Commodities

President Prabowo echoed the government’s commitment to maintaining the zero VAT rate for essential goods and services, ensuring that households have access to affordable basic needs. Essential commodities include:

  • Rice, corn, soybeans, fruits, vegetables, sweet potatoes, sugar, livestock, and fish
  • Groceries, medicine, education, and healthcare services
  • Affordable housing
  • Daily transportation and logistics services

Aim: Reducing Fiscal Deficit

The tax adjustment forms part of the government’s efforts to control the fiscal deficit, while minimizing the burden on the general public. As the tax base broadens, the government anticipates increased revenues, setting the stage for a return to a balanced budget by 2024.

By focusing the VAT increase solely on luxury goods and services, the government addresses fiscal concerns without imposing additional financial strain on the average Indonesian household. As economic conditions continue to improve, the government aims to implement further reforms that foster sustainable growth.

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"Threat Assessment: PDIP’s Warnings on the 12% PPN Content Proposal"

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PDIP Chairperson Questions discipline of DPR Members as Rieke Diah Pitaloka faces MKD Complaint

JAKARTA – Deddy Yevry Sitorus, the Chairman of the Indonesian Democratic Party of Struggle (PDIP)’s Central leadership body (DPP), has spoken out about the recent complaint filed against PDIP legislator Rieke Diah Pitaloka with the House of Representatives’ Ethics Council (MKD). The complaint alleges that Pitaloka provoked a negative reaction against the proposed increase in the Value Added Tax (PPN) rate to 12%.

Sitorus expressed puzzlement at the situation, stating, "The action taken by MKD could potentially undermine the critical role of DPR members and erode public trust in the institution. The DPR, as a checks and balances mechanism against the power of the government, relies on its members’ ability to scrutinize and voice their opinions."

The PDIP chairman highlighted that it is unsurprising for DPR members to critically evaluate government policies. Instead, he queried the lack of engagement from legislators who remain silent in public forums. "The real issue should be with members who are indifferent to their responsibilities and the aspirations of the people. The MKD should investigate those who never speak up, either in parliamentary sessions or through mainstream and social media. After all, the people’s money is used to pay these representatives’ salaries," Sitorus stated.

Sitorus believes that MKD should protect the freedom of DPR members to express their views. He warned that using MKD to suppress critical voices could be detrimental to the DPR’s independence. "MKD was established to safeguard the freedom of DPR members to speak out, not to muzzle them. It would be dangerous if MKD were used to silence members who dare to criticize," he added.

It has been revealed that MKD has received a complaint against Pitaloka regarding her request to postpone the PPN rate increase during a DPR plenary meeting. The complaint, signed by MKD Chairman Nazaruddin Dek Gam, was delivered to Pitaloka on December 27, 2024. Although a summons was issued, it was postponed due to the ongoing DPR recess.

In response, Pitaloka questioned the legitimacy of the summons, given the ongoing recess. She also challenged the veracity of the witnesses’ statements and requested information regarding their verification. Pitaloka maintains that she is currently performing her duties as a legislator, making it impossible for her to attend the MKD hearing.

The aftermath of this incident remains to be seen, as the PDIP and other political parties continue to weigh in on the matter. The balance between critical discourse and ethical conduct within the DPR is set to be a hot topic in Indonesian politics.

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Ahead of the Game: We’ve Started Before You’ve Even Begun

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Presidential Address: Prabowo Speaks Out Against Elitist Deterrents

In his recent address at the National Long-Term Development Plan (RPJMN) 2025-2029 workshop, President Prabowo Subianto took a moment to address certain portions of society that have been critical of his new administration, which has been in office for approximately two months.

Prabowo pointedly spoke about individuals who, despite their high-level educations and prestigious degrees, still maintain a self-deprecating mindset and often denigrate the government’s efforts. "They have PhDs from renowned institutions, yet their self-esteem remains low. They begin to criticize before we’ve even started working," Prabowo stated.

The President also noted that this mindset is not uncommon within Indonesia, with some individuals still struggling with self-doubt. He emphasized that there are those who consider themselves intelligent and, therefore, question the capabilities of their countrymen.

President Prabowo vowed that his administration will continue to strive for a clean and efficient government. He tasked his cabinet, both at the central and regional levels, with reducing budget leaks that ultimately harm Indonesian society. "Civil servants can greatly determine these leaks, and smuggled goods from abroad pose a threat to our nation’s sovereignty," he said.

Prabowo’s directives were delivered at the National Planning Ministry’s headquarters, with participation from Vice President Gibran Rakabuming Raka, all cabinet ministers, the military and police chiefs, and parliamentary representatives from the MPR, DPR, and DPD. Several governors, regents, and mayors were also in attendance, either in person or via video conference.

As the administration looks ahead to the implementation of the RPJMN 2025-2029, President Prabowo’s call for unity and self-belief serves as a poignant reminder of the collective work required to propel Indonesia forward.

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Entwurf eines geplanten Prüfberichts der MKD wegen der Ernennung von PDIP-Mitgliedern als PPN 12% wird als Provokationhari angesehen

by Chief Editor
written by Chief Editor

Headline:
PDP‘s Rieke Diah Pitaloka’s Intervention on PPN Hike Sparks Controversy,andet DPR’s MKD

Article:

Rieke Diah Pitaloka, an Indonesian Democratic Party of Struggle (PDI-P) lawmaker, recently sparked a controversy after her intervention on the proposed 12% Value Added Tax (PPN) hike was viewed as a provocation. Her remarks were subsequently reported to the House of Representatives’ (DPR) Ethics Council (MKD).

Rieke, who is a member of the DPR’s Commission VI representing the PDI-P faction, recently spoke about the contentious PPN increase issue during a plenary session of the DPR. She urged the President-elect, Prabowo Subianto, to reconsider the government’s plan to raise the PPN rate to 12% at the beginning of his tenure.

Rieke’s appeal, made within a packed DPR building at Senayan, Jakarta, was met with mixed reactions. Political figures from Gerindra Party, in particular, have been vocal about opposing the PPN hike. They have been quick to point out that Dolfie Othniel Frederic Palit, the chairman of the taxation task force, is affiliated with the PDI-P.

Rieke’s Intervention and MKD’s Response

In her intervention, Rieke asked President Prabowo to postpone or even scrap the planned PPN hike, aligning with the provisions in the undated Law Number 7 of 2021. She also recommended implementing a self-assessment monitoring system in the tax administration and turning taxes into an anti-corruption tool.

Interestingly, Puan Maharani, the DPR Speaker, shared similar sentiments, stating her confidence in the new government’s dedication to enhancing the public’s well-being. Meanwhile, Sufmi Dasco Ahmad, a DPR Deputy Speaker, suggested an alternative: increasing luxury goods tax by 12% while decreasing tax on essential goods for the populace.

MKD’s Investigation

As a result of these developments, Rieke received a report to the DPR’s MKD. Alfadjri Aditia Prayoga lodged a complaint, alleging that Rieke’s statement contained provocative content pertaining to the 12% PPN hike. Upon receiving the report, MKD Chairman Nazaruddin Dek Gam confirmed the receipt of the complaint and the subsequent summoning of Rieke.

MKD’s initial plans to summon Rieke were delayed due to the ongoing DPR recess. Commission members are currently away from the capital, attending to their constituencies. The matter will be addressed after the recess, with MKD investigation and further actions to follow.

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Rieke Diah Pitaloka Presses For Delay in VAT Increase

by Chief Editor
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Headline:
MP from PDI Perjuangan, Rieke Diah Pitaloka, Facing Ethics Probe Over PPN Hike Remarks

Subhead:
Parliament’s Ethics Body Receives Complaint Amid PPI 12% Increase Controversy

Article:

A member of Indonesia’s House of Representatives (DPR) from the PDI Perjuangan faction, Rieke Diah Pitaloka, is being investigated by the Mahkamah Kehormatan Dewan (MKD) following a complaint regarding her statements calling for the postponement of the planned 12% increase in the Value Added Tax (PPN). The MKD confirmed receiving the complaint, which alleges a potential ethics violation.

Dek Gam, the MKD’s chairman, verified the existence of the complaint. "Yes, the report is there. It’s true, I’ve signed the letter, and there’s no letter without a report. Yes, there is a report," he told reporters.

A summon letter circulating online reveals that the MKD received a complaint accusing Rieke of violation of parliamentary ethics codes due to her public statements that appeared to incite dissent against the PPN hike.

The MKD has scheduled Rieke’s officially summon for Monday, December 30, at the MKD’s conference room. However, the hearing has been postponed due to the ongoing recess, as many DPR members remain in their respective districts.

Previously, Rieke publicly opposed the planned PPN increase during a plenary session. "I propose in this plenary session that we support President Prabowo’s plan to postpone, or even scrap, the 12% PPN hike," she said during an unexpected intervention.

Stay informed as we continue to monitor this developing story. (yoa/pta)

[End of Article]

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2025 Tax Rates: A 7-Component Car Purchasing Calculation

by Chief Editor
written by Chief Editor

Title: Indonesia‘s Upcoming Vehicle Tax Changes: What You Need to Know

In a significant shift in Indonesia’s vehicle taxation landscape, owners of motor vehicles outside Jakarta will face new taxes starting January 5, 2025. A total of seven tax components will be applicable, including two new ones: Pajak Kendaraan Bermotor (PKB) and Bea Balik Nama Kendaraan Bermotor (BBNKB), each set at 66% of the outstanding tax amount.

-effective date
DKI Jakarta, Indonesia – Beginning in 2025, vehicle owners outside the DKI Jakarta area will face new tax obligations. Two new taxes, Pajak Kendaraan Bermotor (PKB) and Bea Balik Nama Kendaraan Bermotor (BBNKB), will be implemented, each calculated at 66% of the outstanding tax amount. In addition to these new taxes, vehicle owners will also have to pay BBNKB, opsen BBNKB, PKB, opsen PKB, biaya admin STNK, and biaya admin TNKB.

that article

Implementing these changes is enshrined in Law No. 1 of 2022, particularly in Article 191(1), which outlines the governance of fiscal relations between the central government and regional governments. According to the Regional Revenue and Expenditure Budgeting (RDRP) module from the Directorate General of Treasury Balance, the ‘opsi pajak daerah’ refers to additional taxes on PKB, BBNKB, and Pajak Motor Bekas (Pajak MBLB).

PKB, or vehicle tax, is an additional tax imposed by regional governments on top of the base PKB amount, as per regulations. Similarly, the ‘opsi bea balik nama kendaraan bermotor’ (opsen BBNKB) is an additional tax levied by regional governments on top of the base BBNKB amount, following regulations.

Tax rates vary depending on regional policies. For instance, the maximum PKB rate for the first ownership is 1.2%, and it progresses up to 6% for subsequent ownerships. For provinces without autonomous districts, the highest PKB rate for the first ownership is 2%, progressing up to 10% for subsequent ownerships.

Vehicle owners can check their tax status and amounts online through the official website of their respective regional governments. Alternatively, they can visit https://www.cnbcindonesia.com/outboundlinks?url=https%3A%2F%2Fsamsat.info%2Fcek-pajak-kendaraan-bermotor-online for a convenient, online checking service.

Simulating Pajak Mobil Baru (New Vehicle Tax)

To illustrate the new tax calculations, let’s consider a Rp 1 million PKB tax. The additional ‘opsi PKB’ would amount to Rp 660,000 (66% of the PKB), resulting in a total PKB tax of Rp 1,660,000. Similarly, the ‘opsi BBNKB’ would be 66% of the BBNKB tax, which the owner would need to pay alongside the vehicle tax.

DetikOto recently simulated taxes for a Toyota Avanza 1.3 E M/T using the following rates:

  • PPnBM: 15% of DPP (Rp 27,562,500)
  • PPN: 12% of DPP (Rp 22,050,000)
  • BBNKB: 12% of NJKB (Rp 21,000,000)
  • PKB: 1.2% of DPP (Rp 2,205,000)
  • Opsi PKB: 66% of PKB (Rp 1,455,300)
  • Opsi BBNKB: 66% of BBNKB (Rp 13,860,000)
  • STNK, TNKB, BPKB, and SWDKLJJ: Rp 818,000 (total)

Adding all these amounts together, the total tax for the vehicle comes to Rp 88,950,000.

For more information, watch our video, "Siap-siap! Tahun Depan Ada Dua Pajak Baru Kendaraan Bermotor" to learn more about the upcoming changes in the vehicle tax landscape in Indonesia.

If you’re interested in learning more about vehicle taxes, check out our related article, "Tarif Pajak Kendaraan Lebih Sederhana, Begini Cara Hitungnya!" for a more detailed breakdown of vehicle tax calculations.

(dce)

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Ensure QRIS Transactions Under IDR 500,000 are PPN-Free

by Chief Editor
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Indonesia Increases PPN Rate to 12% from January 2025: What We Know So Far

In a significant shift, Indonesia’s Value Added Tax (VAT) rate, known as Pajak Pertambahan Nilai (PPN), will rise to 12% starting January 1, 2025. This change affects all transactions, regardless of whether they are conducted in cash or non-cash form. Here’s what you need to know:

Key Takeaways:

  • PPN rate increases to 12% as of January 1, 2025
  • Consumers only pay PPN on the goods or services they purchase; non-cash transactions like QRIS or other non-cash payments do not incur additional PPN charges
  • Bank Indonesia states that any PPN imposed will only apply to the service fee charged by the payment service provider

Understanding the PPN Increase

The Indonesian government has raised the PPN rate from 11% to 12%. This change, while significant, is not expected to have a substantial impact on inflation or consumer spending power. According to the Directorate General of Taxes (DJP), the current inflation rate stands at a low 1.6%, and the increased PPN rate is projected to contribute only a minimal 0.2% to inflation.

Indonesia’s Stance on PPN Increase

The directorate also emphasized that the 2022 tax hike from 10% to 11% did not cause a significant surge in prices or erosion of purchasing power. Officials expect the latest tax increase to follow a similar pattern, maintaining inflation within the government’s target range of 1.5% to 3.5% for the 2025 state budget.

Contrasting Views from Business Sector

While the government dismisses the PPN hike’s potential impact, business owners and bankers hold opposing views. Efdinal Alamsyah, Direktor Kepatuhan of PT Bank Oke Indonesia Tbk. (DNAR), believes the increased tax will drive up prices, squeezing consumer purchasing power and potentially impacting consumer credit demand.

Meanwhile, Welly Yandoko, Executive Vice President of Consumer Loan at PT Bank Central Asia Tbk. (BBCA), expects the tax hike to pose a challenge to the sales of primary properties in 2025 due to rising construction costs and economic uncertainty.

What’s Next?

As the PPN rate increase takes effect in 2025, consumers and businesses alike should monitor its impact on prices and spending power. The differing perspectives from the government and the business sector underscore the importance of paying close attention to how the new tax regime plays out in the coming months.

Sumber: CNBC Indonesia

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