The value added tax (VAT) rate adjustment will take effect on April 1, 2022. With this policy, almost all industries are affected, including the clothing industry. However, it is feared that this policy will not be followed by many business actors. In the end, the decision to increase the selling price is still determined by the producer. The clothing or clothing sector has the potential to experience price increases due to the 11% VAT policy. However, it is predicted that many producers will not comply with the increase in tax rates.

Deputy Chairperson of the Indonesian Textile Association (API) Ian Syarif said there were still many gaps in the application of the VAT regulation. According to him, many business actors, especially fashion retailers, do not comply with the 11% VAT, creating an unfair playing field.

For the sale of clothing at the mall is considered to have complied with the VAT policy. Where, this has an impact on an increase in the selling price of the product by 1%, in the form of the difference between input tax and output tax.

"However, for business actors in online sales, wholesale sales such as at the Tanah Abang center, as well as sales of used clothes, there are still items that are sold without VAT," explained Ian, Thursday (24/3).

According to him, this policy is even more punishing entrepreneurs who have been paying taxes correctly to support the government. Ian said, as long as buyers are given a choice, a free market mechanism will occur. Because, the buyer is considered not to think about the impact of state income from unofficial goods for matters relating to personal wallets.

"So how are we going to sell at a price that continues to rise, if on the other hand something that is not true is still given a way," he said.

He also highlighted the sale of used clothes, imported fabrics, and thrift store clothes which are sold online where these items are exempt from the application of VAT. According to Ian, the government must also think about how this application can be applied to e-commerce in order to create a fair playing field.

"We completely leave the policy to the government. If you want to seriously increase the VAT rate, the regulations must be corrected first. But if the regulations are not improved, the clothing industry will eventually get worse," he said.