Jakarta, IDN Times – The National Food Agency (Bapanas) has clarified that the value-added tax (VAT) imposed on rice applies specifically to imported rice, particularly those meant for niche markets such as hotels and restaurants.
“The rice subject to VAT is specifically imported rice, intended for use in hotels or restaurants,” stated Arief Prasetyo Adi, the head of Bapanas, in a written statement reported on Wednesday (December 25, 2024).
Arief further explained that while the Finance Ministry’s presentation listed premium rice as a subject of VAT, it actually refers to specialized rice that is not produced domestically.
“In the previous presentation from the Finance Ministry, premium rice was mentioned as being subject to VAT, but it pertains more to specialized rice that cannot be produced locally,” he added.
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1. Local Medium and Premium Rice Exempt from VAT
Premium rice from Bulog (IDN Times/Vadhia Lidyana)
According to Arief, the adjustment of VAT from 11 percent to 12 percent, which will take effect next year, will not apply to medium and premium rice produced locally.
The government is committed to ensuring that essential staple foods remain accessible to the public without additional tax burdens, aligning with President Prabowo Subianto’s policy direction that favors the interests of the lower-income population.
“Certainly, President Prabowo prioritizes the needs of the middle to lower class. Especially now, we are actively promoting domestic rice production,” he said.
Read Also: Local Premium Rice Exempt from 12% VAT, Shirataki Affected
2. Special Local Rice Also Exempt from VAT
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Premium rice from Bulog (Doc. IDN Times)
The classification of rice is governed by the National Food Agency Regulation (Perbadan) No. 2 of 2023, which distinguishes rice into premium and medium categories based on quality and broken grain percentage.
Bapanas’ proposal to the Ministry of Finance refers to Article 3, Paragraph 5 of Perbadan 2 of 2023, which recommends that the 12 percent VAT only apply to specific imported rice.
“Rice classified as special from certain regions in Indonesia, such as aromatic local rice, is also exempt from VAT. This is to ensure we maintain a favorable margin for our local farmers,” he elaborated.
Popular premium rice widely available in markets is not considered a luxury item, hence it remains exempt from VAT as before.
Read Also: Airlangga Says Premium Rice is Exempt from 12% VAT
3. Government to Distribute Rice Aid in Early 2025
Distribution of 10 kilograms (kg) rice aid. (Doc. Bulog)
The government, in collaboration with Perum Bulog, will distribute rice aid in January and February 2025 to 16 million Food Aid Recipients (PBP).
A total of 160 thousand tons of rice will be allocated each month, with quality equivalent to medium grade premium, as part of a directive from Bapanas. This initiative is aimed at stimulating the economy while balancing the impact of the 12 percent VAT, particularly concerning food.
The number of aid recipients will be adjusted based on the most recent data, which indicates a decrease in poverty levels to 25.22 million people as of March 2024, down from the previous year.
The data utilized includes the first and second deciles from the Acceleration of Extreme Poverty Elimination (P3KE) initiative, along with elderly individuals living alone and women heading impoverished households.
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