Indonesia on Monday decided to go ahead with a wide-ranging increase in the value-added tax rate to 12% next year, reversing a plan to only apply the hike to luxury goods, but will introduce measures to soften the blow on lower-income earners.

Indonesia will proceed with its value-added tax hike in 2025, while offering a raft of incentives to mitigate the impact on consumption and economic growth.

"premium" goods and services following a public backlash. The hike, from 11% in 2022, was prescribed in a law on tax issued in 2021 and was initially supposed to cover a broad range of items. But a rising public backlash in the past few months,

Indonesia on Monday announced economic measures to soften the blow of an increase in the value-added tax rate, including electricity tariff cuts, incentives for labour-intensive industries, and VAT exemption on some property sales.

Finance Minister Sri Mulyani Indrawati has announced a 50 percent electricity discount for January and February 2025 to protect people's purchasing power