The Indonesian Directorate General of Taxation is reported to be loosening the provisions related to VAT (Value Added Tax) refund for foreign tourists at its international airports.
According to the current policy in effect, VAT refund for foreigners is applicable if a tourist has a minimum VAT value of IDR 500,000, or transactions of IDR 5 million, that are in one Special Tax Invoice (FPK) from one retail store on the same date.
In the new policy, these requirements will be relaxed.
Foreign tourists can apply for a refund using many invoices on different purchasing dates and shops.
"So, a refund of at least Rp. 500,000 (VAT) may be allowed, with different dates and shops. That is already a lot of restitution," said Director General of Taxation Robert Pakpahan as quoted by Kompas. "The regulation of the minister of finance is being prepared."
The Indonesian Government provides a facility for tax refund for goods purchased by foreigners in any shop (retailer) with "VAT Refund For Tourist" logo.
The taxation department's website notes that any foreign passport holders is eligible for VAT refund as long as he/she is not an Indonesian Citizen nor a permanent resident of Indonesia who lives or stays in Indonesia no longer than two months since arriving in Indonesia, and not a member of an airline crew.
Ministry of Finance explains the existing procedure in the video published on May last year.
(Source: Youtube BPPK Kemenkeu RI)
However, not all items purchased by foreign tourists are entitled to a VAT refund.
Food, beverages, tobacco products, firearms and explosives as well as items that are prohibited from being carried onto the airplane cannot be refunded.
The 10 percent tax restitution that first took effect in Indonesia in 2010 applies to foreigners who shop at five international airports in Indonesia, namely Jakarta's Soekarno-Hatta, Denpasar Bali's Ngurah Rai, Medan's Kualanamu, Yogyakarta's Adi Sutjipto, and Surabaya's Juanda.
The new rule is reportedly expected to be finalised in the next month.
