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According to Finance Minister Sri Mulyani, the tax rate increase is implemented gradually, taking into account the domestic economic conditions.

There are at least three (3) areas where tax rates were increased in 2022, including:

1. Personal Income Tax (PIT):

    

   The increase in PIT applies starting from the 2022 tax year. The government added a fifth top tax bracket, where previously there were only four brackets. In this fifth bracket, the tax rate reaches 35% for individuals with annual income exceeding IDR 5 billion.

    

   As a result, individuals falling into the fifth bracket, or those earning more than IDR 5 billion per year, are required to pay a PIT rate of 35%, up from 30% in the previous fourth bracket.

    

   Taxable Income Brackets:	Tax rates
   Up to IDR 60,000,000 (sixty million rupiah)	5% (Five percent)
   Over IDR 60,000,000 (sixty million rupiah) Up to IDR 250,000,000 (two hundred fifty million rupiah)	15% (Fifteen percent)
   Over IDR 250,000,000 (two hundred fifty million rupiah)  Up to IDR 500,000,000 (five hundred million rupiah)	25% (Twenty-five percent)
   Over IDR 500,000,000 (five hundred million rupiah)  Up to IDR 5,000,000,000 (five billion rupiah)	30% (Thirty percent)
   Over IDR 5,000,000,000 (five billion rupiah)	35% (Thirty-five percent)

    

2. Value Added Tax (VAT)
   The VAT increase took effect on April 1, 2022, with the rate rising by 1% from 10% to 11%. A further increase to 12% is scheduled to take place no later than January 1, 2025.

    

   This increase will consider the social and economic conditions of the public, applying a single-rate scheme rather than a multi-rate system.

    

3. Cigarette Excise
   The increase in cigarette excise took effect on January 1, 2022, with an average rise of approximately 12%.

    

   As a result of this increase, the Retail Selling Price (RSP) per pack of cigarettes has risen. The estimated highest price per pack is IDR 40,100 for packs containing 12 cigarettes. Additionally, for Machine-Made Clove Cigarettes (Sigaret Kretek Mesin, SKM) category 1, the estimated price reaches IDR 38,100 per pack.

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