Indonesia - Value added tax (VAT) is currently 11% and will increase to 12% starting next year. This is in line with the provisions of Law No. 7 of 2021 on Harmonizing Tax Regulations (HPP).

Article 7 of the regulation stipulates that from April 1, 2022, the value-added tax rate will be adjusted from the original 10% to 11%. Starting from next year, this number will increase again by 1% to 12%. Article 7, paragraph 2 of the law states: "The value-added tax rate is 12%, which shall come into effect no later than January 1, 2025." However, many goods and services are not subject to the 12% value-added tax. The detailed information of these products is regulated by the HPP Law and the Minister of Finance Regulation (PMK) No. 16 of 2017 on basic necessities exempt from value-added tax.

List of goods and services exempted from 12% value-added tax under Article 4A of the HPP Law:

1. Food and beverages provided in restaurants, hotels, stalls, restaurants, and other places, including food and beverages consumed within or outside the venue, as well as food and beverages delivered to local tax and fee objects of catering enterprises or catering service institutions, shall be subject to local tax and fee regulations.

2. Currency and gold bars used for national foreign exchange reserves and securities.

3. Religious services

4. Art and entertainment services, including various services provided by art and entertainment workers who are subject to local taxes and local taxation in accordance with local laws and regulations;

5. Hotel services refer to room rental services or hotel room rental services that are subject to local tax and fee laws and regulations.

6. Parking space provision services refer to the provision or management of parking space services and taxation by parking space owners or parking space management entrepreneurs in accordance with local tax laws and regulations for parking space users who are subject to local taxes and local taxation.

7. The services provided by the government in general government management, including types of services related to service activities that can only be carried out by the government within its authority as stipulated by law.

8. Catering or catering services refer to all catering service activities that are subject to local tax and fee collection in accordance with local tax and fee laws.

List of Goods Exempted from Value Added Tax 12 in PMK 116/2017:

1. Rice and grains: dehulled, dehulled, polished or unpolished, partially or fully ground, crushed, broken grains, suitable salt for sowing

2. Corn: with or without a shell, including outer skin, cracks, and fissures, excluding seeds

3. Simi: Simi paste (Simi juice), flour, flour, and coarse flour

4. Soybeans: shelled, whole, and cracked, except for seeds

5. Edible salt: iodized or not, including table salt and denatured salt for consumption or basic needs

6. Meat: Fresh livestock and poultry meat with or without bones that has not been processed, frozen, pickled, refrigerated, salted, marinated, or otherwise preserved

7. Eggs: unprocessed, pickled, cleaned, or stored, excluding seeds

8. Milk: heated or cooled milk without added sugar or other ingredients

9. Fruits: freshly picked, cleaned, peeled, sorted, cut, sliced, graded, dried and other processes

10. Fresh vegetables that have been picked, washed, drained, frozen, stored at low temperatures, or chopped

11. Tubers: Fresh, processed through cleaning, peeling, packaging, slicing, cutting, or grading

12. Fresh spices, dry, not crushed or ground

13. White crystalline sugar extracted from sugarcane for consumption, without added coloring or seasoning ingredients.

Reprinted from: Zhejiang Yi Finance