Indonesian government temporary banned all air, sea, and land transportation to reduce the spread of COVID-19 across the nation - Photo by Transportation Ministry Office

JAKARTA (TheInsiderStories) – Indonesian President Joko Widodo has signed Government Regulation Number 50 Year 2019 concerning Import and Delivery of Certain Transport Equipment and the Submission and Utilization of Taxable Services for Certain Transport Equipment that are Not Collected by Value-Added Tax (VAT).

Widodo sign the decree on July 4 and will take effect 60 days after the regulation has been signed.

In this regulation, the government excludes the VAT for leasing transportation, including airplanes. The regulation was made to further encourage transportation industry competitiveness in Indonesia, said the regulation.

The rule states as Article 4, taxable services from outside customs area related to certain transportation equipment, which for value utilization is not collected by VAT covering aircraft rental services utilized by domestic airlines business entity.

According to article 1, the aircraft import, spare parts, safety equipment, and assembly for repairs and maintenance are also no longer burdened with VAT.

“Aircraft and spare parts as well as aviation safety equipment and human safety equipment, equipment for repairs and maintenance that are imported and used by national commercial air transport companies,” said the article.

Furthermore, provisions regarding the requirements and procedures for import, aircraft handover, and utilization of flight services according to rule, are regulated by Minister of Finance.

In addition, regulation also set for sea transportation, water transportation and land transportation as trains will be free from Import VAT. It also talks about various spare parts, and safety devices.

“VAT exemption also implement to safety equipment both on sea, water and land transportation imported by ministry or organizes government affairs in defense sector, the Indonesian National Army, and Indonesian National Police,” said the regulation.

This regulation also applies to human safety equipment imported and used by national commercial shipping companies, national fishing companies, national port service companies, and companies providing transportation services for rivers, lakes and national crossings, according to their business activities.

Since last year, Indonesian government has evaluated the VAT of imports to control the current account deficits position and an attempt to stabilize Rupiah rate against US dollar.

Finance minister Sri Mulyani Indrawati ensured a reduction in a number of goods imported raw materials and consumer goods will not disturb the momentum of economic growth.

Written by Willy Matrona, Email: