2025 New Value Addex Tax Rate
As you may know, under Article 7(1) of Law No. 8 of 1983 on Value Added Taxes on Goods and Services and Sales Taxes on Luxurious Goods as lastly amended by Government Regulation in Lieu of Law No. 2 of 2022 which was made into Law based on Law No. 6 of 2023 (the “VAT Law”), the rate of the value added tax (the “VAT”) should be 12% commencing from January 1, 2025. Also, under Article 7(3) of the VAT Law, the VAT rate may be reduced to 5% and increased up to 15%.
Despite the above, given the resistance from the society in general of such VAT rate increase to 12%, the Minister of Finance issued Regulation No. 131 of 2024 dated December 31, 2024 on Treatment of Value Added Taxes on Imports of Taxable Goods, Delivery of Taxable Goods, Delivery of Taxable Services, Utilization of Taxable Intangible Goods from Outside Custom Areas in a Custom Area, and Utilization of Taxable Services from Outside Custom Areas in a Custom Area (“PMK 131”). PMK 131 limits the application of the new 12% VAT rate. Please see the summary of PMK 131 below.
Under PMK 131, the new 12% VAT rate applies only to imports or delivery of luxurious vehicles and other luxurious goods which is subject to sales taxes on luxurious goods under applicable laws. The 12% rate shall be multiplied by the taxable amount of such luxurious vehicles and goods.
But, for delivery of any taxable goods to a final customer from January 1, 2025 until January 31, 2025, the calculation of the payable VAT on the goods shall be as follows:
11/12 x Sales Value x 12%
Starting from February 1, 2025 the calculation of the payable VAT on the goods shall be as follows:
Sales Value x 12%
Imports or delivery of goods (other than the foregoing luxurious vehicles and goods) and services will also be subject to the 12% VAT rate. However, the basis of the calculation of the VAT shall be as follows:
11/12 x Sales/Import Value x 12%
It is important to note that PMK 131 does not apply to application of the VAT based on certain sales/import value or certain amounts as determined in the relevant applicable laws and regulations. For instance, PMK 131 does not apply to the VAT applicable to construction work performed by oneself which is subject to the following VAT rate: 2.2% of the taxable amount.
AKSET
Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com) for further information.
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2025 New Value Addex Tax Rate