After the subsiding of the Covid-19 pandemic in Indonesia, the government has been actively promoting the tourism sector in several regions of the country. The tourism sector significantly contributes to increasing foreign exchange reserves and drives national economic growth. Therefore, the government has implemented various measures to attract foreign tourists to visit Indonesia. One of these efforts is providing tax incentives in the form of VAT Refund for tourists.
VAT Refund for tourists is a tax incentive given to foreign individuals holding foreign passports, allowing them to claim a refund of Value Added Tax (VAT) paid on taxable goods purchased in Indonesia, which are subsequently taken out of the customs territory or abroad (DJP, 2019).
The VAT Refund for tourists has been regulated by the government through the Minister of Finance Regulation No. 120/PMK.03/2019 concerning the Procedures for Requesting and Resolving Requests for the Return of VAT on Personal Carried Goods by Foreign Passport Holders. Tourists who shop in Indonesia for a minimum amount of Rp 500,000 at designated stores, with a maximum purchase amount of Rp 5,000,000, are eligible to receive a VAT refund.
The requirements for applying for Tax Refund are stated in the Minister of Finance Regulation No. 120/PMK.03/2019 Article 2, as follows:
- Foreign tourists can request a refund of the paid VAT on carried goods.
- The VAT eligible for refund as mentioned in paragraph (1) must fulfill the following criteria: a. The minimum VAT value is Rp 500,000.00 (five hundred thousand rupiahs). b. The purchase of carried goods is made within one month before departure from the customs territory.
- The request for VAT refund on carried goods can be made by the respective foreign tourist.
- The request for VAT refund should be made when the foreign tourist is leaving Indonesia and should be submitted to the Director-General of Tax through the Tax Directorate General Office at the airport.
- The foreign tourist requesting a VAT refund should not be an Indonesian citizen or a permanent resident of Indonesia, and their stay in Indonesia should not exceed 60 (sixty) days from the date of arrival.
During the process, tourists can choose the following options for receiving the tax refund:
- Cash refund in Indonesian Rupiah if the amount does not exceed Rp 5,000,000.
- Refund via bank transfer in Indonesian Rupiah to the tourist’s bank account if the amount exceeds Rp 5,000,000. However, the tourist needs to provide complete information such as bank account number, account name, and address. The transfer will be made within one month from the receipt of the tax refund request.
That concludes the explanation regarding VAT Refund for Tourists. Let us all support the government’s efforts to advance tourism destinations in Indonesia.
Author: Ratih Mayaningrum
Picture: Karolina Grabowska, Pexels