Airfare Discount Policy for the 2025/2026 Christmas and New Year Holiday

The government is once again providing economic stimulus through a 50% discount of Value Added Tax (“VAT”) Borne by the Government (“VAT DTP”) on airline tickets for the Christmas and New Year holiday period. This is stipulated under the Draft Regulation of the Minister of Finance (“Permenkeu”) concerning VAT on the Provision of Scheduled Domestic Commercial Air Transportation Services in Economy Class during the Christmas 2025 and New Year 2026 Holiday Period (“Draft Permenkeu”).

“The VAT DTP scheme covers the base fare, fuel surcharge, and other charges that are subject to VAT and collected by the air transportation business entities,” said Unan Pribadi, Director for the Harmonization of Laws and Regulation (Harmonisasi Peraturan Perundang-undangan – “HPP”) III at the Ministry of Law and Human Rights, to Hukumonline.

This provision does not apply to services provided outside the designated ticket purchase or flight schedule period, non-economy class passengers, or taxable entrepreneurs who fail to submit the detailed list of VAT DTP transactions on time.

The VAT discount was previously rolled out by the government during the school holiday period in June–July. The policy was stipulated in Permenkeu No. 36 of 2025 (“Permenkeu 36/2025”), which was signed by Sri Mulyani Indrawati while she was still in office.

“The process is currently in the harmonization stage with the inter-ministerial or inter-agency committee,” he added.