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Indonesia implements 100% VAT airfare relief scheme to stabilize aviation costs and boost tourism
Bali newsBali12 min read
Indonesia has introduced a 100 percent VAT Airfare Relief Scheme to reduce ticket prices and maintain connectivity across the archipelago, aiming to stabilize aviation costs and ignite tourism growth. This policy, implemented during a period of economic pressure and rising fuel costs, positions Bali as a central beneficiary due to its role as a primary leisure tourism hub. The removal of VAT on base fares and fuel surcharges has reduced ticket price pressure on key routes into Bali via I Gusti Ngurah Rai International Airport DPS, strengthening domestic visitation. Jakarta, operating through Soekarno-Hatta International Airport CGK, remains the central node for domestic aviation, with the VAT absorption mechanism making outbound travel more accessible. Surabaya, via Juanda International Airport SUB, is integrated as a critical industrial and trade connectivity hub, benefiting business continuity and regional leisure travel. Medan, served by Kualanamu International Airport KNO, is positioned as a key northern economic and tourism gateway, with the VAT exemption neutralizing fare escalation pressures. The 2026 fiscal environment, marked by a weakening Indonesian Rupiah and rising aviation turbine fuel costs, led to this full Government-Borne VAT framework under the PPN DTP policy. This intervention, unlike partial relief schemes in 2025, is a full exemption model designed to respond to macroeconomic volatility and protect domestic travel affordability. The mechanism is a time-b
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