The Government has issued Minister of Finance Regulation No. 43 of 2026 (“PMK-43”) as part of its economic stimulus package for the 2026 school holiday period. Under this regulation, the Government provides a Government-Borne Value Added Tax (“VAT DTP”) incentive for the purchase of economy-class domestic commercial airline tickets during the school holiday period, with the objective of maintaining household purchasing power and supporting economic growth.

The Government will bear 100% of the VAT payable on the base fare and fuel surcharge components of eligible domestic economy-class airline tickets.

The Government-borne VAT facility applies to:

• ticket purchases made from 22 June 2026 through 5 July 2026; and
• flights operated between 24 June 2026 through 5 July 2026.

The Government will not bear the VAT domestic flight if:

• the ticket is purchased or the flight is operated outside the prescribed purchase and travel periods;
• the passenger does not travel in economy class; or
• the Taxable Entrepreneur (Pengusaha Kena Pajak/PKP) fails to submit the required electronic detailed list of Government-borne VAT transactions within the deadline stipulated under the regulation.

From a tax administration perspective, air transportation companies registered as PKPs are still required to issue VAT invoices or other documents deemed equivalent to VAT invoices and report the relevant transactions in their Monthly VAT Returns in accordance with the applicable regulations.

For eligible transactions, the VAT should be reported as services benefiting from the Government-borne VAT facility. Transactions that do not meet the eligibility requirements must be reported as taxable supplies subject to the normal VAT collection mechanism.

In addition to the Monthly VAT Return reporting obligation, PMK-43 requires airlines to submit an electronic detailed list of Government-borne VAT transactions to the Directorate General of Taxes (DGT) no later than 30 September 2026.

Minister of Finance Regulation No. 43 of 2026 became effective on 22 June 2026, the date on which it was promulgated.