Foreign tourists tax refund law passed in Indonesia

Foreign tourists visiting Indonesia can apply for a tax refund when buying goods here next year, according to the newly endorsed law on value added tax and luxury tax.

Under the law that is set to be effective starting on Apr. 1, 2010, foreign tourists can apply for a refund if the goods purchased have a minimum value added tax of Rp 500,000 (US$50).

Assuming that an average of 10 percent value added tax is imposed on all goods, foreigners must purchase goods of at least Rp 5 million to be able to get a tax refund.

The refund, while may be late, puts Indonesia equal to neighboring countries like Malaysia, Singapore and Thailand, which have offered a similar refund.