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)
