More services to be brought into Value Added Tax regime
Indonesia is looking to reform its Value Added Tax regime following the widening of its deficit to GDP to over 6%. It has already announced a possible rise in Indonesia VAT.
The possible reforms would seek to reflect the shift in South East Asia’s largest economy towards services. But support the less well off in the case of a rise in the Value Added Tax standard rate. Potential changes include:
- Introducing reduced VAT rates in addition to the existing 10% rate;
- Extending the VAT net to more services, including banking and insurance (financial services); and
- Impose reduced VAT on basic foods, including rice.