Indonesia’s government will implement a 0% electric car VAT, expecting to make national fiscal incentives more competitive with other countries.
Heaptalk, Jakarta — Indonesia’s government is considering several efforts to accelerate the development of the electric vehicle ecosystem in Indonesia through an incentive plan arrangement for potential investors who will build an electric car ecosystem in the archipelago.
As delivered by Indonesia’s Minister of Industry, Agus Gumiwang Kartasasmita, the government will ease off the provisions on the Domestic Content Level (TKDN) of electric cars regulated in Presidential Regulation (Perpres) No 55/2019 and the implementation of 0% VAT for electric vehicles, which is expected to make national fiscal incentives more competitive compared to competing countries in attracting investment electric vehicle.
Regarding evaluating regulation, Minister Agus delivered that the government will revise the Perpres No.55-2019 concerning the battery-based electric motor vehicle program acceleration. The paragraph stipulates that the TKDN of battery-based cars must reach 40% by 2024. However, the government will unbind the deadline to 2026.
Agus emphasized that the deadline for the next TKDN limit is still the same, namely 60% in 2029 and 80% after 2030. The Minister admitted that fulfilling the TKDN requirements will depend heavily on the performance of the electric vehicle battery industry.
Furthermore, one of the discussed incentives is to release taxes for Completely Build Up (CBU). As it is known, currently, CBU cars that enter the Indonesian market are subject to taxes, spanning a Sales Tax on Luxury goods of 125%, an Import Duty of 50%, and an Income Tax of 10%.
“We are formulating this consideration with the Minister of Finance, and President Jokowi has agreed. All of our fiscal policies are required to be more competitive than fiscal policies other countries have provided in the context of electric cars,” added Agus.
The government observed these incentive provisions are part of strengthening the electric vehicles ecosystem. According to Agus, this consideration will be reflected in the addition of government taxes and the expansion of employment opportunities.
Apart from the new electric cars regulation, the government will also expand the criteria for receiving a subsidy of Rp7 million for a new motorbike purchase, considering the current policy has only focused on four points, including recipients of People’s Business Credit (KUR), recipients of work wage assistance under Rp3.5 million, users of electricity below 900 VA, and recipients of social service.
