iarjbmIARJBMIARJBM2708-5147https://doi.org/10.47310/iarjbm.2021.02.01.40Vat Refund Policy as Indonesia Tourism CompetitivenessQrizaSatifahSuparnaWijayaDirectorate General of Taxes, IndonesiaPolytechnic of State Finance STAN, IndonesiaVAT Refund policy provisions as a supporting instrument for tourism development to attract foreign tourists and encourage the participation of retail business sector stated in PMK-120/PMK.03/2019 on The Procedure for Filing and Resolving Tax Return Requests to Increase the Value Added Tax of Personal Goods of Foreign Passport Holders are considered less competitive than Thailand, Malaysia and Singapore. VAT Refund policy will be more useful if the threshold on VAT refund is lowered, as an attraction for foreign tourists to visit and shop in Indonesia. This research aims to find out the implementation of VAT Refund scheme, the interconnectedness of VAT Refund policy to encourage the role of the retail sector and to know Indonesia's opportunities in the development of shopping tourism destinations. The type of research used is descriptive with a qualitative approach. The results showed that the implementation of VAT Refund provisions is in line with the general concept of VAT that taxes are not levied on the consumption of goods abroad. Simplification of the administration process has a positive impact on a growing number of retail stores participating in the VAT Refund program. The threshold of VAT refund can be changed, with the consideration of cost and benefit. The strength of the attraction of visiting foreign tourists in Indonesia is natural and cultural attractions instead of a shopping tourism.