TEMPO.CO, Jakarta - Director General of Small, Medium, and Miscellaneous Industries of the Ministry of Industry Reni Yanita said the 12% value-added tax (VAT) hike will affect car sales next year. 

"We wish for car sales to increase, but then, we must know whether cars are included in the luxury goods category,” Reni told Tempo at the Ministry of Industry Office, Jakarta, on Tuesday, December 10, 2024.

Reni admitted she could not yet confirm which cars would be subject to the VAT hike. She mentioned that certain cars with over 2,000 cc might be subject to higher taxes.

Cars over 2,000 cc had also previously received a suspension of the Luxury Goods Sales Tax (PPnBM) incentive. Whereas cars with less than that cc, stated Reni, should not be subject to the VAT increase next year.

"Car sales are indeed affected by the VAT hike. We hope the economy will improve so purchasing power will also improve,” Reni stated.

Nevertheless, Reni said that the automotive industry can become more competitive with meetings between small and medium automotive component businesses and large corporations.

Previously, on a different occasion, the Coordinating Ministry for Economic Affairs stated that the list of luxury goods subjected to a 12 percent VAT will be regulated by Finance Minister Sri Mulyani. Secretary of the Coordinating Ministry for Economic Affairs Susiwijono Moegiarso, mentioned that President Prabowo has assigned this task to Sri Mulyani.

"The President explained that the technical details will be arranged by the Finance Minister," said Susi when asked about this matter at the Coordinating Ministry for Economic Affairs office in Central Jakarta on Friday, December 6, 2024.

Susiwijono mentioned that determining luxury goods that will be subjected to the increased VAT is the task of Tax Directorate General officials at the Finance Ministry. He stated that the types of commodities exempted from VAT have been regulated in Government Regulation (PP) No. 49 of 2022.

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