https://pro-visioner.com/pvk/ Comparison of VAT Rates of ASEAN Countries, Which One is Higher? ASEAN countries’ VAT rates have become an increasingly relevant topic in the midst of heated conversations about Indonesia’s Value Added Tax (VAT) rate hike.
The Indonesian government’s decision to increase the VAT rate from 11% to 12% by 2025 has sparked various discussions, especially since this move will put Indonesia on par with the Philippines as the country with the highest VAT rate in the region.
This difference not only reflects diverse fiscal strategies, but also presents challenges for Indonesia in maintaining its competitiveness in the regional market.
Need help managing your corporate tax? Get a free tax consultation online . Our team of experts is ready to help you with various tax questions and concerns. Feel free to contact us and improve your understanding of corporate tax!
read also
Comparison of VAT Rates of ASEAN Countries
Value Added Tax (VAT) plays a crucial role in every country’s fiscal policy, including in the ASEAN region. Differences in ASEAN countries’ VAT rates reflect different economic priorities, from raising revenue to attracting foreign investment. Here is a comprehensive overview of VAT rates in the ASEAN region:
1. Highest VAT Rates in ASEAN
Indonesia and the Philippines:
Both countries set the highest VAT rates in the region at 12%.
Indonesia currently charges 11%, but this will increase to 12% by 2025, specifically for luxury goods transactions.
The Philippines has long maintained a 12% rate, making it one of the countries with a high tax burden for consumers and businesses.
2. Medium Rate Countries (10%)
Cambodia, Laos, and Malaysia:
These three countries have a standard VAT rate of 10%.
Malaysia has a slightly different tax system, with a 10% sales tax and 8% service tax.
Vietnam:
Currently, Vietnam has a VAT rate of 10%, but the government has decided to reduce the rate to 8% until June 2025.
This policy aims to increase people’s purchasing power and attract more domestic and foreign investment.
Also Read: VAT Provision Changes 2025: DPP Adjustment for Luxury and Non-luxury Goods
3. Low Rate Countries (5-9%)
Singapore:
The VAT rate of 9% makes Singapore one of the most moderately taxed countries in the region, yet remains competitive for businesses.
Thailand:
With a VAT rate of only 7%, Thailand manages to keep the tax burden light, providing additional attraction for businesses.
Myanmar:
Myanmar’s VAT rate of 5% is one of the lowest, creating promising investment opportunities and low operating costs for international businesses.
4. Countries with Zero Percent (0%) Rate
Brunei Darussalam:
Not charging VAT on domestic transactions, Brunei offers a very attractive business environment for both local and foreign companies.
Timor Leste:
Domestic transactions in Timor Leste are exempt from VAT.
However, for imported goods and services, the country applies a tariff of 2.5%, as a measure to protect local products from foreign competition.
Managing and reporting taxes has never been simpler with pajak.io. Our online taxation platform makes it easy for you to issue tax invoices through the e-Faktur feature, pay taxes through e-Billing, and create withholding slip through e-Bupot Unification. By using pajak.io, the tax management process becomes more structured, efficient, and accurate.
Conclusion
The comparison of ASEAN countries’ VAT rates reflects the different fiscal policy approaches among member countries. While high rates may increase state revenues, low rates give businesses a competitive advantage.
In the face of the VAT rate increase in 2025, Indonesia needs to consider strategic steps to maintain its economic competitiveness in an increasingly economically integrated region.
