Universitas Gadjah Mada
Faculty of Economics and Business

The government plans to impose a 12% Value Added Tax (VAT), including on education, specifically international-standard school services. This 12% VAT is expected to be applied starting in January 2025.

Professor Dr. R. Agus Sartono, M.B.A., a Professor at the Faculty of Economics and Business, Universitas Gadjah Mada (FEB UGM), stated that the 12% VAT on the education sector should be canceled. He argued that if this tax is enforced, it would worsen access to higher education and make Indonesia fall further behind other ASEAN countries.

“Education is a long-term investment and should not be subject to taxation. If leakage and corruption can be minimized, it would be more than enough to finance human resource investment. If we neglect the education sector, it’s just a matter of time before we fall further behind,” he explained recently.

Agus reiterated that imposing a 12% VAT on international-standard education is inappropriate. According to him, the government has been actively encouraging the improvement of international-quality education in Indonesia.

Meanwhile, various legal entity state universities (PTN BH) have long developed international undergraduate programs (IUP). These programs contribute to financing PTN BH and attract student exchange interests from other countries.

“Through IUP, PTN BH can provide cross-subsidies for children from economically disadvantaged families, allowing them access to higher education,” he said.

Agus mentioned that the presence of international students at PTN BH also plays a strategic role in the long term. In addition to promoting education service exports, this also has the potential to produce Indonesians who will play an essential role in strengthening bilateral relations between countries.

“For these reasons, the plan to impose a 12% VAT on international-standard education is very inappropriate and should be canceled,” stressed the man who previously served as Deputy for Education and Religion, Kemenko Kesra (2010-2014) and Deputy for Education and Religion, Kemenko PMK (2014-2021).

He further explained that imposing taxes on the education sector is inappropriate, especially considering the challenges to access education in the country, which remain limited. According to data from the Central Statistics Agency (BPS), the projected population of 19-23-year-olds will be 27.39 million in 2025. Meanwhile, the Gross Enrollment Ratio (GER) for higher education is targeted at 35%. This means the number of university students will reach 9.58 million, indicating the need to increase educational access capacity for 1.27 million students.

“The fundamental question is, why, when the government is struggling to increase access, is it planning to add a burden in the form of a 12% VAT? Not to mention addressing how to tackle educational outcomes that the industry cannot absorb,” he concluded.

Reportage: Kurnia Ekaptiningrum

Sustainable Development Goals