<![CDATA[Increasing the VAT rate is one way for the government to increase tax revenue and address the fiscal deficit. The Indonesian government in 2022 has increased the VAT rate to 11% and 12% in 2025. The increase in the VAT rate to 12% has the potential to be a factor that affects the Economy, Business, and Tax Obligations of Taxpayers. The purpose of this study is to analyze the factors that could be a challenge in implementing a 12% VAT rate and the strategies that the Indonesian government can use to overcome these challenges. The research was conducted qualitatively and data was collected through a literature review. The results show that the challenges faced by the government in implementing the 12 percent VAT rate policy may be caused by the factors of increased tax administration costs, the effect on business and economy, as well as the political system and governance of government institutions. These challenges can be overcome by gradual socialization with the public and building partners, synergizing and correlating fiscal and monetary policies, and political commitment from politicians to support the policy of increasing the VAT rate to 12% so that its implementation can run well.]]>
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