The Government’s state revenue budget has been negatively affected by the Covid19 pandemic. Consequently, on 29 October 2021, the Government enacted Law No. 7 of 2021 to increase the state revenue budget through taxation, especially through value added tax (VAT), which will take effect from 1 April 2022 (Law No. 7).*

Law No. 7 expands the goods that are subject to VAT including food that was previously exempted from VAT such as rice, corn, soybeans, milk, eggs, fruit, and vegetables.

Similarly, Law No. 7 adds VAT to services that were previously not subject to VAT, such as medical health services, social services, education services, labour services and insurance services.

The government does provide some limited relief from the collection of VAT on these goods and services, which will be granted in rare cases if there is no significant impact on the government’s revenue collection.

In addition, Law No. 7 increases VAT on 1 April 2022 from 10% to 11% and on 1 January 2025 from 11% to 12%.

* Law no. 7 of 2021 concerning Harmonisation of Tax Regulations.