Electric Vehicle Sales Will Only be Subject to 1% VAT

JAKARTA. The government is preparing several incentives to encourage the battery-based electric motor vehicle (KBLB) industry in Indonesia, one of which is the reduction of Value Added Tax (VAT).

Quoting Kontan.co.id, the government plans to cut the VAT rate from the current 11% to only 1% on electric vehicle sales. In addition, the government will also provide a subsidy of IDR 7 million for every purchase of electric vehicles.

The provision of this incentive will be included in the Minister of Finance Regulation (PMK), which is currently being drafted and is planned to be finalized next week.

This was conveyed by the Coordinating Minister for Maritime Affairs and Investment, Luhut Binsar Panjaitan, on Wednesday (1/2).

Apart from providing incentives, the government is also considering simplifying tariffs on KBLB imports. According to the government, this measure is also carried out in Thailand and Vietnam to boost the KBLB industry.

The government is targeting the number of KBLBs in Indonesia to reach 10% of the number of vehicles in circulation in 2024, or around 600,000 units of electric motorbikes and 100,000 units of electric cars.

Electric Vehicle Conversion

In addition to purchases, facilities will also be provided for people who will convert their vehicles into electric vehicles.

Citing CNBCIndonesia.com, the facility that will be provided for the electric vehicle conversion program is a subsidy of IDR 7 million for vehicles that meet the criteria.

Some of the criteria that must be met include the age of the vehicle, which is not more than 10 years. Second, the vehicle will be certified, and a double check will be carried out to issue another STNK.  (ASP/KEN)