Indonesia has introduced a VAT cut on domestic flights, exempting economy class tickets for purchases and flights within 60 days of the regulation's enactment. The measure, effective 25 April 2026, caps fare increases at 9‑13% and will make domestic airfares effectively VAT‑free from mid‑June. The policy aims to support the aviation sector amid rising fuel costs.

Indonesia has introduced a regulation covering VAT on base fares and fuel surcharges for economy‑class domestic flights to help reduce airfares amid rising fuel costs. The measure applies for 60 days from 25 April 2026 and includes a fuel surcharge cap of 38% for both jet and propeller aircraft, while limiting fare increases to 9‑13%.

Indonesia's Finance Minister Purbaya Yudhi Sadewa announced plans to inspect a Chinese‑owned steel company suspected of VAT evasion next week. The Ministry has identified 40 steel firms, with the two largest slated for inspection, and estimates that VAT avoidance could cost the state over Rp 4 trillion annually. The investigation will involve tracing tax reports, company registrations, ownership, and detaining tax‑related personnel.

Foreign investors in Indonesia must register for VAT once their annual turnover exceeds IDR 4.8 billion (US$300,000). After registration, all VAT invoices must be issued and validated through the e‑Faktur system, with monthly reporting and reconciliation required. Non‑compliant invoices and inconsistencies between invoices, returns, and accounting records can trigger audits and penalties.