Lawful Tax Evasion

Nov 12th, 2010, in Featured, IM Posts, Travel, by

Duty/tax-free shopping for tourists is coming to Indonesia, sort of.

It is now possible to avoid paying tax in Indonesia, not by bribing someone at the Indonesian Tax Office, but legally.

Gayus Tambahan
Gayus Tambahan
He allegedly helped many people avoid paying tax.
However, this is one scheme he can't assist on.

As reported recently in The Jakarta Post, Indonesia is expanding a trial system of duty/tax-refunds for tourists.

All visitors need to do is:

1. Go to one of these shops participating in the scheme:

Stores with “VAT Refund for Tourist”

Jakarta: Pasaraya Blok M, Sarinah Thamrin, Metro Pondok Indah Mall, Metro Plaza Senayan, Keris Gallery at Terminal 2D’s Soekarno-Hatta international airport, Batik Keris Citraland, Batik Keris Menteng, Batik Keris Pondok Indah Mall 2, Batik Keris Pacific Place, Keris Department Store Menteng, Keris Department Store Puri Indah Mall, Jean Paul Gaultier Plaza Indonesia, Christian Louboutin Plaza Indonesia, Club Monaco Plaza Indonesia, Sogo Plaza Senayan, Sogo Kelapa Gading, Sogo Pondok Indah Mall, Sogo Emporium Pluit, Seibu Grand Indonesia, and Alun-alun Indonesia Grand Indonesia.

Tangerang: Batik Keris in Supermal Karawaci

Bali: Batik Keris at Discovery Shopping Mall, UC Silver in Batu Bulan, Gianyar, Mayang Bali in Kuta, Sogo Bali Collection, Sogo Discovery Shopping Mall, Alun-alun Indonesia Nusa Dua, Batik Keris at Ngurah Rai airport, Atlas South Sea Pearl in Sanur, Dewis in Sukawati, Gianyar and Windu Sari in Batu Bulan, Gianyar.

     
Two of the many choices

2. Spend a cool Rp5 million.

3. Depart Indonesia within 30 days of purchase and reclaim the 10% tax from the registered tax refund counter at Jakarta's or Bali's airport, after passing immigration.

This system has a few limitations and disadvantages compared with e.g. the tax refund for tourists scheme that operates in Singapore:

- You have to spend a lot more money to qualify for a tax refund.

Rp5 million is a lot of souvenirs and batik shirts. In Singapore, you have to spend a relatively small $S100, at the current exchange rate about Rp700 000.

IDR/SGD exchange rate
The current BI exchange rate for $S1.
Multiply the figure on the left by 100 to get the current value for $S100 in Rp.

To work out Rp5 million in other currencies (e.g. $US, €, £, etc) use the Bank Indonesia Exchange Rate calculator.

- You can only get the refund when leaving Indonesia, and only in Rupiah cash or bank transfer.

     
Option A: Indonesian Rupiah Cash         Option B: Bank Transfer

Receiving Rupiah cash just before you leave the country isn't much use. You will have two options. Firstly, visiting a moneychanger at the airport (whose exchange rates aren't great). That assumes the moneychanger has stock of the foreign currency you seek; they may not. Alternately, you could keep it for next time - if there is one.

In Singapore, there are other options: you can receive a refund directly upon purchase (either as a discount or as a cash refund), or do it via snail mail.

In addition, Singapore dollars are more widely accepted by moneychangers in the region than Indonesian Rupiah, probably because the currency is more stable.

As for the bank transfer option, it seems unlikely most foreign visitors are going to brink their bank details. Even if they did, they're not likely to know e.g. their bank's SWIFT code.

- Certain items which could be cheaper in Indonesia than the goods' destination country (or unique items not available in other countries) are excluded.

Some of the products on the blacklist include: food, beverages and tobacco products. Also on the "no-fly list" are guns, explosive goods and any materials that are not allowed to be taken into an aircraft. (Side issue: I didn't know you could bring guns and explosive goods on an aircraft in Indonesia).


Sorry, you cannot claim a tax refund on this item


So, the question is this: Do you think that with these limitations the tax refund for tourists scheme is a waste of time/money? (In the first six months, there were only 46 claims, totalling Rp41 million).

Please add your vote "YES" or "NO", preferably with a reason. Other comments are also welcome.


7 Comments on “Lawful Tax Evasion”

  1. avatar Hans says:
    November 12th, 2010 at 2:00 pm

    Plaza Indonesia, I do not shop there, but it whill be easy for they who do to spend five million on this rather boring plaza. weird dots that choose these expensive plaza, do they still thik that all Europeans and Americans are immensely wealthy, and pays whitout any reflection. two feet on earth, can be a good start, independent of what dream we are in.

  2. avatar realest says:
    November 18th, 2010 at 8:59 pm

    1. Those stores have a reputation of having prices through the roof. Getting a two-way flight to those first-hand Batik craftsmen probably cost the same or maybe less if you buy in bulk.
    2. Nobody usually goes through the trouble of claiming them and, even if they do, those assholes at the airport would just fck your money up.

    So NO, this scheme is totally a waste of time and just adds up to the already confusing clutter of ads we see upon arrival.

  3. avatar David says:
    December 4th, 2010 at 10:27 pm

    Yogyakarta airport will have the tax refund facility by Jan 1st 2011, says Antara. After that Bandung, Surabaya, Manado, and Medan will be considered for inclusion in the programme.

  4. avatar Chris says:
    July 1st, 2011 at 2:39 pm

    I checked out the VAT Refund office while travelling internationally from Jakarta recently – see photo below – and noticed the following points of interest:

    - It is hard to find, in the corner of Terminal 2E after you pass through the secure entrance.

    - It is opposite the check-in counters and before immigration, not after as previously reported.

    - It is desolate. There was nobody there, nor any information or brochures you could take.

    So, I would probably still vote NO based on this experience.

  5. avatar Oigal says:
    July 1st, 2011 at 3:44 pm

    Last trip O/S (about a month ago) took the little tax file card they issue you with to get the stamp for free exit and they said “don’t worry about it mister, not required anymore, tax canceled” (ok still not sure what those wackers were sitting in the box for then)

    That was Jakarta and yes did get on the plane with no one asking where was the exemption

  6. avatar Chris says:
    July 1st, 2011 at 7:16 pm

    Hi Oigal,

    I think you’re referring to the Indonesia resident departure tax a.k.a. fiskal. As promised three years ago, it was abolished at the start of 2011 for all and not just people with a NPWP/tax file number.

    This article refers to duty-free shopping.

  7. avatar Oigal says:
    July 1st, 2011 at 9:17 pm

    Indeed, my apologies



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