Indonesia to cover VAT on domestic economy flights for year-end holidays
The incentive covers base fares and fuel surcharges, but excludes extras such as additional baggage and seat selection.
Indonesia’s government will pay 100% of the value-added tax on eligible domestic economy-class air tickets for travel between 22 December 2026 and 10 January 2027. Tickets must be purchased between 20 October 2026 and 10 January 2027 to qualify.
Finance Minister Suahasil Nazara signed Finance Ministry Regulation No. 77 of 2026 on 12 October 2026, providing for the incentive under the 2027 fiscal year. The government said the measure aims to support purchasing power and economic activity during the Christmas and New Year holidays.
The tax coverage applies to base fares and fuel surcharges, rather than every charge included in an airfare. VAT on additional baggage and seat selection remains payable by passengers. Flights outside economy class are excluded, and both the booking and travel dates must meet the stipulated conditions.
An example in the regulation uses a base fare of Rp790,000 and a fuel surcharge of Rp121,600. The government would cover the Rp100,276 in VAT on those components if the ticket meets the eligibility requirements.
Airlines registered as taxable businesses must issue tax invoices or equivalent documents and report the VAT. They must also submit electronic transaction details through the Directorate General of Taxes website by 31 March 2027, including booking references, airports, purchase and flight dates, taxable amounts and government-covered VAT.
If an airline misses the reporting requirements and deadline, the affected services will not qualify for government-paid VAT. The tax will instead be charged under the applicable tax rules.
