Finance Minister Purbaya Discusses Possible VAT Rate Cut

JAKARTA, 14 October 2025 – Finance Minister Purbaya Yudhi Sadewa said a possible reduction of the Value‑Added Tax (VAT) rate is being discussed during the APBN Kita press conference. The current VAT rate is set at 12% with an effective rate of 11% for most goods and services.

The statutory VAT rate rose to 12% on 1 January 2025, but Ministerial Regulation No 131/2024 keeps the effective rate at 11% by calculating the tax base (DPP) as 11/12 of the transaction value. Any reduction must weigh effects on consumer purchasing power and state revenue, Purbaya explained.

A lower VAT could lower consumer prices, but the government must consider a potential drop in tax receipts. The final decision will be made after an economic assessment at year‑end.