Plan For The Decrease In Limit Of Value Added Tax Refund

At the moment, the Directorate General of Taxation (DGT) is considering the decrease in minimum limit of transactions entitled to value added tax (VAT) and luxury goods sales tax (LGST) refund facility at airports. The consideration is made because the minimum limit of Rp5 million is considered too high.

Based on Law No. 42 Year 2009 regarding the Third Amendment to Law No. 8 Year 1983 regarding Goods and Services Value Added Tax and Luxury Goods Sales Tax, individuals holding a foreign passport may request for refund of VAT and LGST on the purchase of taxable goods brought out of the customs areas of Indonesia. However, the refund must meet some conditions, among others the minimum value of VAT of Rp500 thousand.

According to plan, the minimum limit will be decreased from Rp5 million to Rp1 million. Decrease in the minimum limit does not require the amendment to such law and is merely made by a government regulation.


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