The government has officially announced that a Value Added Tax (VAT) of 12% will be applied to luxury goods. A VAT of **11%** is effective for general goods and services excluding luxury goods. This regulation is stipulated in Finance Minister Regulation (PMK) No. 131 of 2024.
Luxury Goods Subject to 12% VAT
According to Article 2 Paragraph 3 of PMK No. 131, luxury goods are subject to a 12% VAT. Luxury goods include automobiles and other luxury goods, which are subject to *Luxury Goods Tax (PPnBM)*. Therefore, luxury goods are subject to both PPnBM and a 12% VAT.
The current list of luxury goods is further defined in Government Regulation No. 61 of 2020. Luxury goods fall into two categories:
- ✔️ Automobiles
- ✔️ Other Luxury Goods
The application of PPnBM on automobiles is regulated by Finance Minister Regulation No. 141 of 2021 and Finance Minister Regulation No. 42 of 2022, while the regulations for other luxury goods are covered by Finance Minister Regulation No. 96 of 2021 and Finance Minister Regulation No. 15 of 2023.
Five main categories of luxury goods besides automobiles are as follows:
- High-end housing, such as apartments, condominiums, and townhouses
- Aircraft (excluding government or commercial aircraft)
- Vessels and aircraft (excluding public use)
- Firearms and ammunition (excluding government use)
- Luxury cruise ships (excluding government use, public transportation, and tourism businesses)
Goods and Services Other Than Luxury Goods
Goods and services other than luxury goods are subject to an effective VAT of 11%. According to Article 3 of PMK No. 131, while a 12% VAT is generally applied to goods and services other than luxury goods, the tax is calculated using "other benchmark values (DPP Nilai Lain)". This other benchmark value is calculated as 11/12 of the import price, selling price, or alternative price.
Therefore, a VAT of 11% is applied to goods and services other than luxury goods, calculated as 12% x (11/12) x selling price or import price. Tax deductions are possible for this tax.
Transition of 12% VAT on Luxury Goods in 2025
PMK No. 131 stipulates the following regarding the transition of the 12% VAT:
- From January 1 to January 31, 2025: A 11% effective VAT will be applied to luxury goods. During this period, the tax amount is calculated by applying 12% to the selling price and then dividing the result by 11/12.
- From February 1, 2025 onwards: The standard 12% VAT will be applied to luxury goods.
Please refer to the attached file for the original source~
