Relaxing the Automotive Industry, the Government Trims STLG on Sedans

JAKARTA. The government relaxes Sales Tax on Luxury Goods (STLG) on the purchase of sedans and 4 X 2, with cylinder capacity below 1,500 ccs.

It is done to encourage the automotive industry that is depressed due to the Corona Virus Disease 2019 (Covid-19) pandemic.

According to the written statement of Coordinating Minister for Economic Affairs Airlangga Hartarto, relaxation will be given from 1 March 2021 for the next three months which is divided into three stages, with each stage lasting for three months.

During the first stage, or between March to June the government will relax STLG up to 100% of the current tariff. 

Then, in the second stage the amount will be reduced by 50%, and the third stage to 25% of the applicable tariff.

Read: Government Cuts the Number of Luxury Goods Subject to VAT and SLTG

Currently, the provisions on the imposition of STLG on motor vehicles are stipulated in Minister of Finance Regulation (PMK) No. 33/PMK.010/2017. 

In this regulation, STLG tariff for sedan vehicles with a cylinder capacity of 1,500 ccs and below is 30%

Restoring The Economy

Airlangga argued that this incentive can boost national economic growth.  Considering that the contribution of the automotive industry to the Gross Domestic Product (GDP) reached 19.88%.

Apart from this, the automotive industry also has broad implications for other economic sectors.

In addition, the recovery of the automotive industry will have an impact on the availability of jobs, because it is a labor-intensive industry.  It is recorded that 1.5 million people work in this sector.