Value Added Tax Exemption Policy onImport of Solar Panel Machines in Indonesia

The objective of this paper is to evaluate policy on Value Added Tax (VAT) incentives available to solar energy in Indonesia. The research method used is a qualitative approach. The data are collected based on documentary / library research, field research (observation & in-depth interview) and Focus Group Discussion. The problem of high prices of domestic solar panel components compared to imported products from China and Japan, is a major problem for the solar energy sector. Considering there is no VAT incentive on import and / or domestic delivery of the components of the solar panel raw materials. The Government only provides VAT exemption incentives on the import and / or domestic delivery of panel machinery through Government Regulation No. 81 of 2015. This incentive is less in demand by solar panel products. The research shows that it needs to establish the comprehensive framework of VAT regulation specific to solar energy industry. For practical aspect, the government also needs to formulate the implementation of the regulation as legal bases of VAT incentives with the clear scope, control mechanism and institution coordinating.