12% VAT in Indonesia Comes at a Bad Time

Key Summary:
- Indonesia's 12% VAT is the highest in ASEAN
- Additional IDR70-100tn revenue from VAT
- Poor timing given slowdown in household spending
The Indonesian government plans to increase Value Added Tax (VAT) rate to 12% in 2025, despite an apparent slowdown in the economy, particularly in household consumption.
Backstory: As the 2024-2029 government aims to accelerate economic growth through various new programs, the Ministry of Finance (MoF) plans to partially fund them through a higher VAT.