Unchanged: 12% VAT Rate Continues to Apply to Luxury Goods in 2026

JAKARTA, DDTCNews - A VAT rate of 12% continues to apply to supplies of luxury goods next year. For non-luxury goods, the rate remains 11% as an alternative tax base is used.

Febrio Kacaribu, Director General of Economic and Fiscal Strategy at the Ministry of Finance (MoF), stated that there will be no change to the VAT rate policy next year. Accordingly, the provisions on 12% VAT on luxury goods set out in MoF Reg. 131/2024 remain in force.

"The policy that was previously announced [for 2026] is that there is no change to [VAT] policy," he said, as quoted on Sunday (17/8/2025).

For reference, the increase of the VAT rate to 12% was stipulated under the Law on the Harmonisation of Tax Regulations. The regulation provides for the rate to take effect no later than 2025. However, the 12% rate ultimately applies only to supplies of luxury goods.

Pursuant to MoF Reg. 131/2024, goods subject to Sales Tax on Luxury Goods (STLGs) or classified as luxury goods are charged at 12% of the selling price or import value.

Luxury goods include, among others, motor vehicles, such as cars, motorcycles and electric vehicles, as well as luxury residences, hot-air balloons, ammunition, aircraft and cruise ships.

Further, non-luxury goods or services are subject to a 12% rate multiplied by the alternative tax base (dasar pengenaan pajak/DPP in Indonesian) of 11/12 of the selling price, consideration or import value. As a result, the effective VAT rate remains 11%.

All provisions on the VAT rate under MoF Reg. 131/2024 have been in effect since 1 January 2025. Accordingly, this regulation will continue to apply until any further regulatory changes are made. (rig)