Indonesia's government will cover the full 11% VAT on domestic economy flights during the Eid holiday period, making air travel more affordable for millions of travellers. The tax relief covers base fares and fuel surcharges.
Indonesia’s Finance Ministry introduced Regulation Number 4 of 2026 (PMK-4) on 6 February 2026, to boost consumer spending and support economic activity during the Eid al-Fitr holiday season. This measure eliminates the value-added tax burden on qualifying domestic air travel, with the government absorbing 100% of the VAT cost.
The tax relief applies to economy class tickets on scheduled domestic flights, but travellers must meet specific timing conditions. Tickets must be purchased between 10 February 2026 and 29 March 2026, with actual flight dates falling within 14 March 2026 through 29 March 2026.
The government covers VAT only on the base airfare and fuel surcharges. Additional services, including seat selection and extra baggage, remain subject to the standard 11% VAT rate under existing tax regulations.
Airlines must follow strict administrative procedures to implement this incentive properly. They are required to issue VAT invoices clearly showing that the government bears the tax, maintain detailed transaction records, and submit comprehensive reports to the Directorate General of Taxes.
The reporting deadline is set for 31 May 2026, with transaction lists submitted electronically through the tax authority’s online platform. Airlines experiencing technical difficulties may file hardcopy reports at their registered tax office by 30 June 2026 at the latest.
Airlines failing to meet reporting deadlines forfeit the incentive entirely. In such cases, the VAT becomes the airline’s responsibility and must be paid according to standard tax rules.
