Indonesia Wants to Make Tax Refund More Attractive for Tourists

Indonesia, VAT, refund, strategy

Minister of Tourism Arief Yayia wants to lower VAT refund minimum

Indonesia Ministry of Tourism is looking at revising the tax refund system for tourists, to turn Indonesia into a more attractive shopping destination…

It has now been two years that Indonesia introduced a tax refund scheme for tourists but so far, the system does not seem to be so attractive and can be called a failure for various reasons. The amount to benefit of a refund is judged exorbitant . Minimum amount is actually fixed at IDN 5 million, equivalent to US$345. To compare, VAT refund in Thailand starts at THB5,000 (US$150) and as low as S$100 in Singapore (US$73). Another request for the tax refund in Indonesia is to fill up on the same day of purchase and ask for a refund within a month.

According to Finance Minister Sri Mulyani Indrawati, her ministry received a request from Tourism Minister Arief Yahya and this is now under study. “We will study the request for a revision of the tax refund regulation,” Sri Mulyani told to reporters in Jakarta.

Arief called on the Finance Ministry to decrease the minimum amount per store to IDN1 million (US$69). The Minister of Tourism believes that the current level makes Indonesia a rather unpopular shopping destination. According to newspaper tempo.com,  Arief Yahya declared that the proposal was submitted to the Finance Ministry after he got input from stakeholders in the Tourism Ministry. “I hope the new regulation can be issued as soon as possible,” he added.

Meanwhile, Sri Mulyani said she could not say whether the ministry would agree with Yahya’s request. She said her ministry would discuss the issue. End of last year, Indonesian Shopping Center Tenant Association (Hippindo) chairman Budihardjo Iduansjah already asked the government to lower the minimum amount for tax refund, to promote more the facility offered to travellers and expand places where VAT refund can be done. Only airports have VAT refund counters for now.