Kampus ITS, ITS News – The Ministry of Finance of the Republic of Indonesia (Kemenkeu RI) has announced the cancellation of the Value Added Tax (VAT) rate, which has increased to 11 percent for gold bars and granules. There is a role of the Center for the Study of Public Policy on Business and Industry (PKKPBI) of Institut Teknologi Sepuluh Nopember (ITS) seeking to cancel the 11 percent VAT.
Head of PKKPBI, Dr. Ir Arman Hakim Nasution MEng, said that analyzing the impact of VAT carried out ITS’s role in canceling VAT for gold. Presenting the study results in front of the Indonesian Ministry of Finance, the VAT impact analysis is carried out by taking into account the visibility of Bullion Bank. Namely, the bank is responsible for conducting precious metals transactions, including gold and silver.
Arman commented that some gold craftsmen, the Indonesian Gold Jewelry Association (APEPI), and others do not charge 10 percent VAT on all their products. “Products subject to 10 percent VAT are only gold bars produced by PT Aneka Tambang Tbk (Antam),” he said.
Furthermore, the ITS Business Management Department lecturer explained that because of the 10 percent VAT, most of the gold jewelry industry imports its products from Singapore. The imports are because the import tax on gold bars is only 2 percent. Meanwhile, if you buy from Antam yourself, you will be subject to a 10 percent tax. “This is strange when domestic products become more expensive than imports,” he said.
The man born in Muna, Southeast Sulawesi, revealed that Indonesia’s current gold export capacity is only around 54-60 percent of the total production. Thus, the price of gold in Indonesia will fall more expensive if added again to the VAT of 11 percent.
As a result, the imposition of 11 percent VAT has drawn protests from most gold industry players in Indonesia, mainly through APEPI. They protested because APEPI is an upstream industry. In addition, they revealed that 30 percent of the gold craftsman industry in Indonesia are SMEs. APEPI, which accommodates prominent gold entrepreneurs, 30 percent of its production involves labor, not machines but craftsman skills.
Based on this analysis, the ITS assistant professor concluded that the 11 percent VAT increase was considered ineffective for upstream industries and small and medium enterprises (SMEs). He added that the ITS PKKPBI had carried out a dynamic simulation of the impact of an 11 percent VAT increase on gold sales. “Our simulation results indicate that there will be a decline in gold sales turnover, employment cuts, a decrease in gold imports, and various other impacts,” he said.
Not only gold, Arman explained that silver artisans would also be affected by the 11 percent VAT. The effects are because silver artisans in the villages need gold as a mixture of silver to manufacture their products such as rings, necklaces, etc.
The study analysis was finally presented at the Ministry of Finance of the Republic of Indonesia through the Deputy for Coordination of State-Owned Enterprises Business Development, Research, and Innovation. Ultimately, a policy response resulted in gold becoming one of the strategic products that were not subject to 11 percent VAT. ITS’s role can accommodate the community’s aspirations through the complaints of entrepreneurs and gold artisans regarding the impact of 11 percent VAT on the gold industry.
Finally, Arman hopes that with the current increase in gold prices, gold export activities in Indonesia should be able to compete strongly with other countries. In addition, he also hopes that APEPI can boost export markets abroad to compensate for the 11 percent VAT income that has been lost to other sales taxes. (ITS PR)
Reporter: Bima Surya Samudra
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