Indonesia is set to impose a 12% Value Added Tax (VAT) on luxury goods and services beginning January 1, 2025, marking a significant shift in tax policy. Among the items affected are premium foods, including high-end meats like wagyu and Kobe beef.
Finance Minister Sri Mulyani announced the details during a press conference on the Economic Policy Package for Welfare at the Ministry of Finance headquarters on Monday (16/12/2024).
“Take, for example, premium wagyu and Kobe beef, which are priced between IDR 2.5 million and IDR 3 million per kilogram. These will be subject to the 12% VAT,” said Sri Mulyani.
In contrast, essential food items and regular meat, priced between IDR 150,000 and IDR 200,000 per kilogram, will remain exempt from this tax. “Beef commonly consumed by the public, priced at IDR 150,000 to IDR 200,000 per kilogram, will not be taxed,” she clarified.
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The regulation doesn’t stop at premium meat. Other high-value food items, such as premium rice, exotic fruits, and luxury seafood like salmon, tuna, and king crab, are also included in the taxable category.
Beyond food, the new VAT regulation extends to luxury services. Sri Mulyani highlighted that international-standard schools and VIP-class hospitals will also fall under the 12% VAT bracket. Even household electricity usage, specifically for homes consuming between 3500 and 6600 VA, will not be spared.
This policy aims to target luxury consumption without burdening the majority of the population who rely on basic necessities. With this initiative, the government hopes to strike a balance between increasing tax revenue and ensuring economic equity.
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