Regulation Update
Hajj Travel Services and Other Religious Services are Now VAT Free

Tuesday, 28 July 2020

Hajj Travel Services and Other Religious Services are Now VAT Free

The government released a list of types of religious services that are free of Value Added Tax (VAT) through the Minister of Finance Regulation (PMK) number 92 / PMK.03 / 2020. One of the services in the religious field that is free of VAT is the implementation of the worship trip either conducted by the government or travel agency. Worship travel services organized by the government include organizing regular Hajj and Umrah pilgrimage to the cities of Mecca and Medina.

While religious worship travel services organized by travel agencies include, first, the services of organizing special Hajj, Umrah to the city of Mecca and Medina for those who are Muslim. Second, a religious trip to Jerusalem and / or Sinai for those who are Christians.

Third, the pilgrimage to the Vatican and/or Lourdes for the Catholics. Fourth, travel to the city of Uttar Pradesh and/or Haryana for the Hindus. Fifth, worship trip to the city of Bodh Gaya and/or the city of Bangkok for the Buddhists. Sixth, the service of worship to Qufu city for those who follow Confucianism or confucianists.

Exception

The exemption of VAT is imposed on a number of fees or commissions paid by the service users including the submission of travel tickets, booking of transportation and/or accommodation, as well as religious travel guidance service.
However, if the travel organizer organizes traveling activities elsewhere, outside of the places specified above, will be charged 10% VAT.  Except, these places are only for stopover or transit.

In addition to organizing religious services, other religious services that are not levied by VAT include services for houses of worship, sermons or preaching service, and services for organizing religious activities.

For information, this regulation is a derivative of Government Regulation (PP) number 1 of 2012 concerning the implementation of Law number 42 of 2009 on Value Added Tax. Previously, in the VAT Act the government had indeed stressed that the provision of services in the field of religious was VAT free.



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