Indonesia Value-Added Tax and Import Duty Exemption For Renewable Energy Property

The Regulation of 2010 mainly applies to renewable energy, but also to power plants in general. It stipulates that Import duty exemptions are valid for:

• for machinery and capital for renewable energy; 
• for capital goods required for public electricity supply (on- and off-grid).

Value Added Tax (VAT) exemptions apply to taxable goods imported to develop renewable energy projects, as long as no substitutes are manufactured in Indonesia. Exemptions are valid for 2 years with optional exenstion depending on applicability and feasibility. As of 2016, the exemption is still applicable.

The VAT exemption applies to machinerey (both constructed and dismantled); while tax may still be rasied on spare parts that companies need to use renewable energy for end-product manufacturing.

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