ABSTRACT
Indonesian government launched an alternative energy di-versification to overcome the scarcity of fossil energy. The bioethanol industry produced from sugarcane molasses is an industry expected to have a prospective role in the provision of bio-fuels. However, the growth of the molasses industry is decelerated by various factors, including the absence of Value Added Tax (VAT) incentive. This study aims to analyze the imposition of VAT on molasses from the principle of economic growth and tax collection. This research uses a case study with a qualitative analysis of grounded theory. The results of the research note that the imposition of VAT on molasses has not fulfilled the economic growth principle and has not been considered to obtain VAT incentive. The government should be able to consider granting VAT incentive on molasses to encourage the development of renewable energy.
