The Indonesia government has recently launched a new tax scheme to reduce the price of air tickets. The Indonesian government will now subsidise the 11% Value Added Tax (VAT) on domestic economy-class air travel, in line with the Indonesian Minister of Finance Regulation No. 24/2026 (PMK 24/2026).
The move is a response to the sharp rise in the price of aviation fuel (avtur), which has soared in the post-energy transition. By making the tax exempt from the passenger’s burden, the government is seeking to curb price increases in domestic air travel and support the tourism industry.
Key Details of the VAT Subsidy
The VAT subsidy is designed in a way that it provides immediate relief to the consumer, but it is a short-term scheme with some conditions that consumers must understand before they buy airline services. It will apply for 60 days from April 25, 2026, when the government will provide a subsidy for the Value Added Tax (VAT) on the ticket price and fuel surcharge. The deal, however, only applies to economy-class domestic flights, so Business and First-class passengers will be subject to the regular rates of VAT. In all, the government is seeking to absorb most of the fuel surcharge hike, with the overall increase in the price of air passage being capped at 9% to 13%.
How to Save on Your Next Trip
To maximize your savings during this 60-day window, consider the following travel strategies:
Book Economy-Class Only
As the reduction in VAT rate is only applicable to economy tickets, flying with upgraded cabins will be much more expensive, as you will have to pay the full 11% tax rate and the higher fuel surcharges.
Monitor the 60-Day Window
The government’s subsidy is currently set to end in late June 2026. If you need to travel for the summer holidays, it is recommended to purchase your tickets and travel within this two-month period to enjoy the reduced tax rate.
Compare Airline “All-In” Prices
The government has increased the cap for fuel surcharges to 38% for all types of aircraft, but not all airlines will pass on these increases in the same way. Be sure to check “All-In” fares on travel sites to get the final price, including the VAT subsidy.
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Why the Government is Stepping In
Jet fuel costs now make up around 40% of airline costs. The subsidy has prevented domestic fares from increasing by almost 30% to 50% in some areas. The government aims to preserve interregional mobility and purchasing power by allocating an estimated Rp1.3 trillion (around $76 million) monthly for this subsidy.
For official updates on flight regulations and tax policies, you can visit the Ministry of Finance or the Coordinating Ministry for Economic Affairs.
FAQs
Do I need to apply for a refund to get the VAT back?
No. The value added tax (VAT) is “paid by the government” (PPN DTP), so it should be included in the price of the ticket. The receipt should show that the VAT is borne by the government.
Does this apply to international flights departing from Indonesia?
No. The regulation targets the domestic economy only for Indonesia’s domestic flights to boost domestic tourism and connectivity.
What happens after the 60-day period ends?
Unless extended, the 11% VAT will be applied to domestic economy tickets. Consumers are advised to make their bookings before June 2026.
