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March 14, 2025 | 12:06 pm
TEMPO.CO, Jakarta - Ahead of Eid al-Fitr 2025, the Indonesian government has introduced incentives to reduce domestic airfares. The Ministry of Finance reported that the subsidy for airline ticket discounts during the Eid period amounts to Rp286.1 billion.
Deputy Minister of Finance Suahasil Nazara stated that the policy aims to lower ticket prices by 13-14 percent.
"Airfares are expected to drop by approximately 13 to 14 percent through the payment of Value-Added Tax (VAT) covered by the government," he said during a state budget (APBN) press conference at the Ministry of Finance headquarters in Jakarta on Thursday, March 13.
According to Suahasil, VAT will still be applied but will be borne by the government (VAT DTP). As a result, the 2025 state budget will forgo potential VAT revenue of Rp286.1 billion.
"The VAT is paid but is covered by state spending," he explained.
Two-Week Incentive Period
The incentive will be in effect for two weeks during the Eid holiday season, from March 24 to April 7. It applies only to economy-class tickets on designated aircraft types, covering 500 domestic flight routes.
Earlier, Finance Minister Sri Mulyani Indrawati issued a regulation governing the incentive, which officially took effect on March 1, 2025. Under this policy, the government will cover 6 percent of the VAT on airfares, reducing the passenger’s VAT obligation to 5 percent.
The official regulation regarding this VAT incentive is outlined in Finance Minister’s Regulation (PMK) No.18 of 2025 on Value-Added Tax for Scheduled Domestic Commercial Air Transport Services in Economy Class Covered by the Government for the 2025 Fiscal Year (PMK-18/2025).
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