W

ith the expansion of the VAT refund program for foreign tourists, the government hopes visiting Indonesia will be more enjoyable.

The program, providing exemption to the 10 percent Value Added Tax (VAT) added to most products in certain stores, was among efforts to provide better services to foreign tourists, Taxation Directorate General spokesman Iqbal Alamsyah told The Jakarta Post recently,

According to the Central Statistics Agency (BPS), the number of foreign tourists visiting Indonesia reached 586.500 in August, a 3.48 percent increase from the 566,800 people in the same month last year.

In the January-August period, foreign tourist numbers reached 4.63 million, a 12.12 percent increase from the 4.13 million recorded in the same period last year.

Iqbal said it was time for the Indonesian government to further expand the refund program, a practice which has been implemented in many other countries. In Singapore, for example, tourists could easily recover taxes added to the prices of goods, he said.

“We want to attract more foreign tourists to spend their shopping time here by, among others things, exempting them from taxes imposed on goods,” he said.

Taxation Directorate General business process transformation director Robert Pakpahan said the government had received many good responses to the program, both from tourists and retail outlets praising the facility.

“We’ve seen an increase in the number of VAT refund claims submitted by foreign tourists,” he said.

As of Oct. 6, the total amount of taxes returned through the VAT refund counter at Soekarno-Hatta airport had reached Rp 41.06 million (US$4,598) for 46 claims, comprising Rp 40.39 million paid in cash and the remainder by transfer.

Yohanna Maria, the head of the tax service sub-directorate at the Pratama Tax Office in West Tangerang, said the VAT refund counter at Soekarno-Hatta airport had in fact received a lot more claim requests from tourists.

“However, not all the requests were eligible for VAT refunds,” Yohanna told the Post.

For example, tax refunds are currently only provided for goods purchased from retailers displaying a “VAT Refund for Tourists” sign, she said.

The minimum VAT refund is Rp 500,000 per valid tax invoice from a retailer on the same purchasing date. This means tourists must spend at least Rp 5 million to receive a refund.

Some goods are excluded from the refund facility, including food, beverages, tobacco products, guns, explosive goods and any materials that are not allowed to be taken into an aircraft.

Foreign tourists can also ask for refunds if goods are purchased less than a month before they leave Indonesia. More importantly, goods must be carried out of Indonesia as accompanied luggage.

With a growing number of VAT claims, more retail outlets had submitted expressions of interest in the program, Robert said.

On April 1, eight retail outlets were appointed by the directorate to participate in the VAT refund program, comprising five retailers in Jakarta and three retailers in Bali

Responding to retailers’ requests, 22 more outlets were appointed by the Taxation Directorate General to take part in the program. These included 14 retail outlets in Jakarta, one in Tangerang and seven in Bali.

The Batik Keris outlet at Supermal Karawaci, Tangerang, was also appointed to join the program.

Robert said the government would soon introduce the refund facility at several other international airports, since at preset VAT refund counters were only available at Soekarno-Hatta in Jakarta and Ngurah Rai in Bali.

Deborah Detzel, a US citizen, who recently visited Indonesia, warmly welcomed the program.

“It’s a great idea to provide tax refund facilities among efforts to attract more tourists,” she told the Post on Saturday, while shopping for souvenirs at Sarinah Thamrin, in Central Jakarta.

However, she said many foreign visitors were not aware of the facility.

“I’ve visited Indonesia several times, but I’ve never heard about this program,” said Deborah, who works as an assistant director at the English Language Institute at the University of Delaware.

Better promotion could result in a better implemented VAT refund facility, she said, adding that she had visited Indonesia for its cultural richness and wonderful scenery, not for shopping. (ebf)