VAT incentive for domestic flight tickets during the upcoming Christmas and New Year holidays
On 20 October 2026, the Minister of Finance (MoF) issued PMK-771, providing a Value-Added Tax (VAT) incentive in the form of 100% VAT fully borne by the Government on domestic flight services for the upcoming Christmas and New Year holidays.
This incentive applies exclusively to economy class tickets for scheduled domestic flight services and is available during the following periods:
- Ticket purchase period: 20 October 2026 to 10 January 2027; and
- Travel period: 22 December 2026 to 10 January 2027.
Under normal circumstances, these tickets are subject to VAT at an effective rate of 11%, in accordance with the provisions outlined in PMK-1312. The VAT borne by the Government applies only to the base fare and fuel surcharge and does not apply to other costs borne by the passenger, such as extra baggage fees and seat selection charges.
The incentive under PMK-77 provides that the entire 11% VAT amount will be borne by the Government.
Airline companies that utilise this facility are required to:
- Issue VAT invoices indicating that 100% of VAT is borne by the Government; and
- Submit an electronic detailed list of VAT borne by the Government no later than 31 March 2027.
The above VAT invoices and detailed list must be reported on a cumulative basis in the relevant Monthly VAT Return.
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