The Institute for Essential Services Reform (IESR) has called on the\ngovernment to review Ministerial Regulation on Home Affairs\n(Permendagri) No.\u00a011 of 2026 on motor vehicle taxes. IESR assesses that\nthis policy change could potentially impede the acceleration of the\nnational electric vehicle programme.<\/p>\n
Meanwhile, the government\u2019s target of reaching 2 million electric\ncars and 13 million electric motorcycles by 2030 has the potential to\nsave foreign exchange on imports worth up to Rp 49 trillion and reduce\nfuel subsidies by Rp 18.3 trillion per year.<\/p>\n
IESR Chief Executive Officer Fabby Tumiwa stated that the change from\na zero per cent tax mandate to a policy dependent on each region risks\ndisrupting the development of the national electric vehicle market.<\/p>\n
\u201cNational tax incentives must be maintained and even expanded. The\nshift from a zero per cent tax mandate to rates dependent on each\ngovernor\u2019s fiscal policy will damage the price parity that is essential\nfor mass adoption,\u201d said Fabby.<\/p>\n
IESR assesses that the sustainability of investments in the electric\nvehicle sector heavily depends on regulatory stability. Policy\ninconsistencies are seen as risking reduced consumer interest as well as\nthe investment climate for electric vehicle manufacturing and charging\ninfrastructure, amid the early growth phase of the market.<\/p>\n
In addition, IESR believes that Permendagri No.\u00a011 of 2026 needs to\nbe aligned with Law No.\u00a01 of 2022 on Financial Relations between the\nCentral Government and Regional Governments (UU HKPD). That regulation\npreviously provided policy direction by excluding renewable energy-based\nvehicles from taxable objects.<\/p>\n
\u201cArticle 7 of the UU HKPD has provided a very progressive policy\ndirection by excluding renewable energy-based vehicles from taxable\nobjects. We see the need for synchronisation so that Permendagri No.\u00a011\nof 2026 still refers to that law\u2019s mandate, thus maintaining the\n\u2018non-taxable object\u2019 status for electric vehicles,\u201d said Fabby.<\/p>\n
IESR has requested that the government, particularly the Ministry of\nHome Affairs, postpone the implementation of provisions related to\nelectric vehicles, carry out regulatory harmonisation, and provide\npermanent fiscal guarantees for the electric vehicle sector towards the\n2030 targets.<\/p>\n
\u201cWe cannot achieve industrial decarbonisation and the cessation of\nfuel imports if the rules of the game change every two years. If this\nregulation is not revised soon, it will be highly vulnerable to material\nreview at the Supreme Court, which will only worsen consumer and\ninvestor confidence,\u201d added Fabby.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/electric-vehicle-tax-changes-prompt-iesr-warning-on-investment-risks-1777009926", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }