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.

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.

The government is proceeding with its plan of hiking value-added tax to 12 percent at the turn of the year but has announced multiple incentives to soften the blow for consumers.

Indonesia will on Monday announce an economic policy package, including its decision on the value-added tax rate, its senior economic minister said after a meeting with President Prabowo Subianto. The government has previously said Indonesia would increase the VAT rate to 12% from the current 11% in January 2025,