Indonesia Goes Ahead With VAT Hike, Offers Perks to Soften Blow.

Indonesia is moving forward with a planned increase in the value-added tax (VAT) to 12% from 11% in 2025, despite concerns about its impact on consumption and economic growth. The government will provide exemptions for basic goods and services like food, health, education, and public transport, while also implementing a one percentage point hike on certain staples. The decision to proceed with the VAT hike has sparked public backlash, with concerns about weakening purchasing power and layoffs in the manufacturing sector. The government aims to maintain a healthy state budget while offering incentives such as income tax coverage for labor-intensive sectors and discounts on electricity tariffs to mitigate the effects of the VAT increase. [Extracted from the article]