Banten Deputy Governor Responds to Tax Exemption for Electric Vehicles, Highlights Declining Regional Budget

Minister of Home Affairs (Mendagri) Tito Karnavian has requested that regions implement tax exemptions for electric vehicles. The Banten Provincial Government will follow suit, but has raised concerns about the annual reduction in the regional budget.

“Indeed, there are two sides to this, because fuel prices are currently rising. If electric cars are promoted, there is no dilemma either. Because we want to be environmentally friendly. One, we want to be environmentally friendly, and we also want the electric industry, electric cars, to develop in Indonesia,” said Banten Deputy Governor Achmad Dimyati Natakusumah on Friday (24/4/2026).

Dimyati said he had previously conveyed to Mendagri Tito Karnavian about issues with regional revenues. According to him, regional revenues from the tax sector are increasingly diminishing.

“This is a trend where the regional budget is declining year by year. Why is it declining? For example, Banten Province’s 2025 regional budget is Rp12 trillion, the 2026 budget is Rp10 point something trillion, and the 2027 budget could be Rp9 trillion. Because, as mentioned, motor vehicle taxes are increasingly shifting towards electric cars,” he said.

Nevertheless, Dimyati stated that the Banten Provincial Government will follow the central government’s directives. However, he hopes that in the future, there will be a policy to impose taxes on electric vehicles, albeit at a low rate.

“Well, we depend on regulations from the centre. If the centre regulates a ban, then so be it. As I said, it’s dilemmatic, on one side for environmental friendliness with fuel that is currently declining, it’s difficult. Fuel is hard to come by,” he said.

“Now, if electric cars are also burdened, what will happen is a complete paradox. But as mentioned, we hope that future regulations can be considered,” he added.

Minister of Home Affairs Circular

Previously, Minister of Home Affairs Tito Karnavian instructed all governors in Indonesia to provide fiscal incentives in the form of tax exemptions for owners of electric vehicles. This instruction was outlined in Circular Letter (SE) Number 900.1.13.1/3764/SJ on the Provision of Fiscal Incentives in the Form of Exemption from Motor Vehicle Tax and Motor Vehicle Name Transfer Fee for Battery-Based Electric Motor Vehicles.

This directive follows Presidential Regulation (Perpres) Number 79 of 2023 on Amendments to Perpres Number 55 of 2019 on the Acceleration of the Battery-Based Electric Motor Vehicle Programme for Road Transportation, as well as the Minister of Home Affairs Regulation (Permendagri) Number 11 of 2026.

Tito explained that the incentives provided include exemptions or reductions in regional taxes, covering Motor Vehicle Tax (PKB) and Motor Vehicle Name Transfer Fee (BBNKB).

“The provision of incentives for exemption or reduction of regional taxes in the form of PKB and BBNKB for battery-based electric vehicles, including motor vehicles that have been converted from fossil fuel to battery-based electric vehicles,” said Tito in a written statement on Thursday (23/4/2026).

This step is taken to encourage energy efficiency, strengthen energy resilience, and support energy conservation in the transportation sector. Additionally, this policy aims to accelerate the transition to clean energy and maintain better air quality that is environmentally friendly.