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Indonesia Government Reaches Agreement with Finance Commission on 2022 Budget Tax Measures — Orbitax Tax News & Alerts

The Indonesian government has reportedly reached agreement with the finance commission of the House of Representatives on tax reform measures first announced as part of the 2022 Budget in August 2021. Key measures agreed to include:

  • An increase in the standard VAT rate from 10% to 11% from April 2022 with a further increase to 12% from 2025;
  • Maintaining the standard corporate tax rate at 22% from 2022 (a reduction to 20% currently scheduled);
  • A new top individual income tax rate to 35% on income exceeding IDR 5 billion from 2022, along with an increase in the upper threshold for the 5% rate from IDR 50 million to IDR 60 million;
  • The introduction of a new carbon tax from April 2022 based on market pricing per kg of CO2 equivalent on goods and activities with greenhouse gas emissions, with a floor rate of IDR 30 per kg that will initially apply for coal power plants; and
  • The introduction of a tax amnesty program from 1 January to 30 June 2022, with tax rates of 12% to 18% for undisclosed assets during the period 2016 to 2020.

Additional details on the tax measures will be published once available.