Indonesia No Longer Plans to Impose 12 Percent VAT for Luxury Agricultural Products

ID2025-0003 – This report serves as an update to FAS Jakarta’s previous report outlining Indonesia’s plans to impose a 12-percent value-added tax (VAT) for luxury agricultural products (please see GAIN Report ID2024-0053). This would have been a significant change, since agricultural products had not previously been subject to any VAT. Through an official press conference on December 31, 2024, President Prabowo Subianto announced a reversal which effectively means there will be no changes to VAT applications for agricultural goods, although the VAT for certain processed food products previously taxed at 11 percent will remain in place at that rate. Fresh agricultural products that were not previously subject to any VAT will remain exempt.

Dairy and Products Annual

ID2024-0038 – The signature campaign promise of the newly sworn-in Prabowo administration, the Free Nutritious Meals Program, will be a large driver of increased demand over the next five years as the program aims to provide milk to over 82 million beneficiaries daily by 2029. Indonesian 2024 dairy demand is projected to rebound back to 2022 levels at 4.2 million metric tons and increase to 5.3 million metric tons in 2025 due to the additional drinking milk consumption increase to meet the Government of Indonesia’s 2025 target for the Free Nutritious Meals Program. The new administration will also be actively pushing for increased milk production through the importation of a target 1 million dairy cattle from various countries over the next five years.

Agricultural Biotechnology Annual

ID2024-0034 – Research and development of agricultural biotechnology in Indonesia continue to progress gradually. Over the past year, around 10 GE crop events have obtained food and feed approval, although only one has received environmental approval for domestic cultivation. To date, more than 50 crop events have received food and feed safety certificates. However, the development of animal biotechnology has not been prioritized. There is still no regulatory framework for GE animals and no GE animal products have been approved for commercialization. Since food security is a top priority of the new Prabowo Subianto administration, Indonesia’s national strategy supporting the increased development of GE products is expected to continue if not ramp up.