Headline: Indonesia Spared From New PPN Rate; Rice Among Exempted Commodities
Subheading: National Food Agency (NFA) assures consumers that staple food items, including locally produced rice, will not bear the increased 12% PPN rate.
Article:
In a recent announcement, the National Food Agency (NFA) has clarified that Indonesia’s staple food items, particularly locally produced rice, will not be subject to the impending 12% Pajak Pertambahan Nilai (PPN) tax increase. The new PPN rate, set to take effect in 2025, will not apply to strategic food commodities, as confirmed by NFA Head, Arief Prasetyo Adi.
"We understand the significance of rice in Indonesia’s dietary landscape and have ensured that it remains exempt from the PPN increase," Adi explained in a written statement, obtained on Wednesday (25/12/2024).
The exemption extends to locally produced rice, including special varieties like aromatic rice. However, imported rice like the premium ‘Shirataki’ from Japan will be subject to the increased 12% PPN rate, as confirmed by Coordinating Minister for Food Zulkifli Hasan (Zulhas). This is to ensure that the increased tax burden falls primarily on luxury or imported goods, rather than basic commodities.
The NFA has submitted a proposal to the Ministry of Finance, suggesting that the 12% PPN rate should only apply to specific imported rice varieties that are not produced domestically. This stance aligns with the regulations outlined in Peraturan Badan Pangan Nasional (Perbadan) No. 2/2023, which categorizes rice into ‘prime’ and ‘medium’ variants based on their degree of wholesomeness and broken kernels.
"Rice, particularly premium varieties, is widely consumed and distributed across all market sectors," said Adi. "The government is taking steps to ensure it is not classified as a luxury good, thereby avoiding increased PPN charges."
PPN is a form of value-added tax that is levied on goods and services in Indonesia. The 1% increase, from 11% to 12%, is expected to generate additional state revenue while maintaining Indonesia’s competitiveness in the global market.
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