The Government Prepares Incentives for Domestic Flights

The Government is preparing a Draft Regulation of the Minister of Finance (RPermenkeu) on Value Added Tax (“PPN”) on the Supply of Scheduled Domestic Commercial Air Transportation Services in the Economy Class, which will be Borne by the Government (Ditanggung Pemerintah - “DTP”). The Government will bear the 11% PPN on economy class airline tickets in order to mitigate the impact of rising aviation fuel prices on domestic airfares.

“Currently undergoing harmonization of the substance of the draft regulation on the provision of incentives in the form of PPN borne by the Government,” said Unan Pribadi, Director of Harmonization of Laws and Regulations III (“HPP III”) at the Directorate General of Laws and Regulations (“DJPP”), Ministry of Law, to Hukumonline.

The draft regulation also contains provisions regarding the obligation of Air Transportation Business Entities, as Taxable Entrepreneurs (Pengusaha Kena Pajak/PKP), to issue Tax Invoices or certain documents treated as equivalent to Tax Invoices. It also includes the obligation to submit Periodic Value Added Tax Returns (SPT Masa PPN), in accordance with the administrative requirements of the previous Permenkeu during the 1447 H/2026 Eid al-Fitr period. The PPN DTP period applies to ticket purchases and flight schedules within a 60-day period.