These Countries Lower VAT, Indonesia Increases It


Indonesia will increase the rate of Value Added Tax (VAT) to 11 percent. The increase will take effect on April 1, 2022. When Indonesia increases its VAT rates, these countries lower their VAT. There are cuts in value-added tax (VAT), income tax (PPh), to a special fuel tax.

The closest country that recently cut tax rates in Vietnam. VAT, which has been in effect at 10%, has been reduced to 8%. As reported by Reuters, Friday (3/25/2022) the decision was taken to help the business sector affected by COVID-19.

The Vietnamese government admits it will lose US$2.17 billion in revenue, but the reduction in tariffs can help restore the purchasing power of the people and the business sector.

European countries are also taking similar steps. Almost all countries in Europe have cut taxes on energy or food.

Portugal has cut VAT on petrol by 13%, Belgium will cut VAT on gas and electricity to 6% from March-July 2022, Cyprus has cut VAT on electricity for household use to 9% from 19 while gasoline to 5%. Italy has cut VAT on household gas usage to 5% until June 2022.

Spain has cut VAT on household fuel consumption from 21% to 10% as of April 30 this year. Croatia is also cutting VAT on heating fuel and basic foodstuffs starting next month.

In mid-February, the Turkish government has cut VAT for basic foodstuffs to 1% from the previous 8%. The tax reduction applies to dairy products, fruits, vegetables, and cooking oil.

Furthermore, Turkey has also removed import duties on sunflower ore oil products to lower prices.

Then, the Bulgarian government is proposing a tax cut of up to 0% for food, water, and electricity from April this year.

Furthermore, Poland will cut VAT on electricity and gas from 23% to 8% for February to July 2022 as well as reduce food items to 0% in February 2022 and gasoline to 8%.

In October, France gave a subsidy of 100 euros to those earning under 2,000 euros per month. France also plans to ease the burden on truck drivers by providing a discount of 0.15 euros per liter on gasoline and diesel purchases.

Causes of the VAT Decrease phenomenon

Tax Observer Darussalam said, overall in the last year, tax policies in the world have varied. Some have gone down, but not a few have gone up, depending on the condition of the country.

For countries that reduce tariffs, it will be greatly influenced by the need to encourage economic recovery due to the COVID-19 pandemic. On the other hand, there is the war between Russia and Ukraine which has pushed up international commodity prices, including oil, mining, and food.

But according to him this is only temporary or more accurately called relaxation. Because not a few countries concerned also need funds to fill the budget deficit.

“The decrease or increase in the VAT rate in a country depends on the considerations of each policymaker in that country. One of the considerations is inflation and an increase in the burden on society because the VAT bearer is ultimately the community as the final consumer,” he explained.