This has a negative impact on the continuity of the Hajj and Umrah travel business. At that time the government issued a mobility restriction policy. The government of Saudi Arabia has temporarily suspended the Umrah pilgrimage since February 27, 2020.
Along with the decreasing number of Covid-19 sufferers which has brought mobility back to normal, some people have started to return to traveling abroad, including in the context of carrying out the Umrah pilgrimage and also visiting other countries.
This has made the hajj and umrah travel business entrepreneurs start to stretch again after a long period of suspended animation due to the effects of the Covid-19 pandemic. Umrah pilgrimage enthusiasts are increasing from year to year in line with the longer queues for the pilgrimage.
Based on data from the Ministry of Religion, the number of Indonesian Umrah pilgrims in the 2014-2015 period amounted to 649,000, increased in 2015-2016 to 677,509, increased again in 2016-2017, namely 876,246, then jumped significantly in 2017-2018 to reach 1,005,336, and decreased slightly in 2018-2019 to 974,650 worshippers.
After the second year (2020-2021) of Fakum due to the Covid-19 pandemic, Umrah pilgrims welcomed back to carry out the Umrah pilgrimage to the Grand Mosque on January 8 2022. The total number of Umrah pilgrims at Soekarno-Hatta Airport who departed was recorded at around 340,000 people until May 24 2022.
According to the report from the Ministry of Religion, Indonesia’s haj quota for 2022 is 100,051 with details of a special haj quota of 7,226 and a regular haj quota of 92,825. The Hajj quota was again obtained after two years of the Hajj pilgrimage not being carried out due to the Covid-19 pandemic.
Characteristics of Religious Services That Are Not Subject to VAT
The government provides legal certainty for the imposition of Value Added Tax (VAT) on the services of organizing Hajj and Umrah activities through Minister of Finance Regulation (PMK) Number 92/PMK.03/2020 concerning Criteria and/or Details of Religious Services Not Subject to Value Added Tax on 22 July 2020, among others, 1. types of services that are not subject to VAT are certain services in the religious services group.
2. Religious services that are not subject to VAT include services for houses of worship, services for giving sermons or da’wah, services for organizing religious activities, and
other services in the religious field
3. Other services in the religious sector that are not subject to VAT include services for organizing regular Hajj pilgrimages and services for organizing Umrah pilgrimages by the government to the City of Mecca and Medina City, and services for organizing Special Hajj Pilgrimage and/or organizing Umrah Pilgrimage Tours by travel agents to Mecca and Medina.
4. in the event that the services for organizing religious pilgrimages also organize travel to other places, not in the context of transit, whether listed or not listed in the offer of travel organizing services, the services are subject to VAT.
5. input tax in connection with the delivery of travel organizing services to other places cannot be credited.
VAT on Hajj and Umrah
Referring to the provisions in Article 4A Paragraph (3) letter f of Law (UU) Number 8 of 1983 concerning PPN and PPnBM as amended several times, most recently by Law Number 7 of 2021 concerning Harmonization of Tax Regulations, religious services are one of the services that are not subject to VAT.
Based on the elucidation of Article 4A paragraph (3) letter f, what includes religious services includes services for houses of worship, services for giving sermons or preaching, services for organizing religious activities and other services in the religious field.
Due to the imposition of the 11% VAT rate in Law Number 7 of 2021, the government then issued fourteen derivative regulations in the form of PMK, including PMK Number 71/PMK.03/2022 concerning Value Added Tax on the Delivery of Certain Taxable Services. This regulation comes into force on April 1, 2022.
The applicable rate is 1.1% x Selling Price of travel packages to other places, if the bill is broken down between Hajj and Umrah packages and bills for travel packages to other countries. Meanwhile, if the bill is not broken down between Hajj and Umrah packages and bills for travel packages to other countries, the rate is 0.55% x Selling Price of the entire package.
As an illustrative guide, travel agents offer Umrah plus Turkey packages for 14 days with a package price of IDR 35,000,000.00. There are no details between the bill for the Umrah package price and the price for the travel package to Turkey, so the VAT calculation is as follows.
Basic Tax Imposition (DPP) = IDR 35,000,000.00
VAT : 0.55% x IDR 35,000,000.00 = IDR 192,500.00.
From the provisions above, it can be concluded that Hajj and Umrah pilgrimage services are not subject to VAT, but if Hajj and Umrah travel services also organize trips to other places such as tourist trips to Turkey, Egypt and other countries, these services are subject to VAT.
Taxable Entrepreneurs (PKP) in collecting and depositing VAT payable with a certain amount must detail bills between Hajj and Umrah packages and travel package bills to other places so that the calculation of VAT is only from bills for travel packages to other places.
It is hoped that the exemption from the imposition of VAT on the Hajj and Umrah pilgrimages will support the development of the Hajj and Umrah pilgrimage travel business. This VAT exemption can reduce the price of Hajj and Umrah travel packages. Affordable Umrah package prices can foster public interest in carrying out the Hajj and Umrah pilgrimages.
Meanwhile, the imposition of VAT on tourist travel services to other places besides performing Hajj and Umrah, provides convenience and fairness in contributing to state revenues.