VAT will increase to 12%, Garuda Boss ensures that ticket prices will increase

Jakarta –

It is planned to increase the rate of Value Added Tax (VAT) to 12% in 2025. This plan is stated in Law No. 7 of 2021 regarding the Harmonization of Tax Regulations approved on 29 October 2021 by ‘ President Joko Widodo.

The President Director of PT Garuda Indonesia (Persero) Tbk, Irfaniaputra, said that an increase in the VAT rate to 12% could make the price of plane tickets, which are already said to be expensive, even higher. This is because this fee is an additional part of the ticket price apart from the fee set by the airline.

“Please get ready, soon VAT will increase from 11 to 12%, plane tickets will definitely increase,” Irfan said at the 2024 Public Exhibition in Cengkareng, West Jakarta, Monday (11/11/2024).

He said that Garuda had never increased airline ticket prices above the applicable provisions for premium rates (TBA). Although Irfan admitted that the prices of the tickets sold by airlines were at the peak of the TBA to seek profits that were getting thinner due to various factors.

“Ticket sales have a single-digit margin, so when the demand for ticket prices goes down, we have no other option but to survive, and there really is no other option,” Irfan said.

“So this is what we do as a company to ensure that our responsibility to investors and the public is maintained and to ensure that it increases profitability over time,” he explained again.

Domestic flight ticket prices sold by airlines from 2019 to 2024 have not changed. However, this increase in VAT then makes the final ticket price even more expensive.

“We have never deviated from the ticket price guidelines that are regulated by the government. Since 2019, they have never increased. But the entrance fee (additional tax from VAT) to be paid,” he explained.

However, this increase in VAT rates will only affect domestic air ticket prices. At the same time, routes to foreign countries are not subject to tax, whether VAT or aviation fuel purchase tax.

“The jet fuel we buy for domestic flights is taxable. The jet fuel we fly to Singapore is not taxed. The tickets we sell to Balikpapan are payable. We sell them to Shanghai, there is no tax,” he explained.

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(acd/acd)