DJP Criticises Electric Vehicle Tax Incentives for Limited Technology Transfer

Directorate General of Taxes (DJP) has highlighted that the implementation of tax incentives for battery electric vehicle (BEV) industry has not sufficiently strengthened the national industry. Director General of Taxes Bimo Wijayanto stated that many companies receiving tax facilities are more focused on utilising the incentives rather than driving technology transfer and domestic workforce development. He noted that the government has identified several weaknesses in the implementation of the super deduction tax facility for research and development (R&D) activities in the electric vehicle industry. He explained that the government previously provided additional tax deductions for electric vehicle R&D investments up to Rp2.5 trillion over five years. However, in practice, most investment funds have been used for internal company facilities and importing machinery, which also benefit from other tax exemptions such as VAT and Income Tax Article 22. Bimo added that while some companies have established global-scale electric vehicle R&D centres in Indonesia, the majority of investment is still directed towards building facilities and importing machinery. On the other hand, the contribution of investment towards knowledge transfer to local workers and academics is still limited. “The portion allocated for training and developing young Indonesian talent has not reached 10% of total investment implementation,” he said. These measures are being taken to ensure that investment implementation aligns with submitted proposals and delivers tangible impacts on national industry development. Audits will cover capital expenditure, consistency of machinery imports with investment reports, and the validity of reported project implementation by incentive recipients. Bimo stressed that the government does not want investment commitments to remain only on paper without real-world implementation.