VAT and Goods and Services Tax (GST) are applied to most goods and services in Indonesia. Imports are subject to VAT and GST, but most exports are not.
VAT and GST taxes are called Pertambahan Pajak Nilai or PPN. PPN is a ten percent, point-of-sale tax that extends to services supplied by foreign taxpayers outside Indonesia if these services benefit Indonesia. Provisions allow for certain items to be taxed as high as 20 percent with a cap of 35 percent.
PPnBM is the Sales Tax (GST) on luxury goods. It is levied in addition to PPN. It is imposed on luxury goods which are both manufactured in and imported into Indonesia. Rates range from 10 to 50 percent, with a few items taxed as high as 75 percent.
As PPN applies to the sale of agricultural products, a difference is made between modern and traditional retailers. In deference to Indonesia's traditional market economy in rural areas, cottage industries such as farmers' markets and other small businesses are exempt from sales and service taxes.
The following services are not subject to VAT:
A VAT rebate for luxury goods bought in Indonesia is available for tourists at international airports on the day of departure.
Eligibility is restricted to tourists who have stayed in Indonesia for no longer than two months. Foreign residents are excluded.
As this is a relatively recent programme, most participating retailers are limited to shopping malls in Jakarta and Bali.
The VAT rebate can be received in cash or through an electronic bank transfer
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