Dragon Project Applies for Tax Holiday, ESDM: Still Differences in Rule Interpretation

The Ministry of Energy and Mineral Resources (ESDM) has revealed that the giant integrated electric vehicle (EV) battery project, the Dragon Project, is applying for a tax holiday incentive facility. However, the application by the consortium of Contemporary Amperex Technology Co. Ltd (CATL) and Indonesia Battery Corporation (IBC) is still hampered by differences in the interpretation of regulations. Secretary General of the ESDM Ministry Ahmad Erani Yustika explained that the main issue lies in the interpretation of the Minister of Finance’s Decree, which has undergone several changes. He said the government needs to align its views because it concerns the reference year for the regulation’s use. “So, the problem with the tax holiday applied for by the Dragon project is still hampered by the interpretation of the Minister of Finance’s decision. There have been several changes,” Ahmad Erani said when met at the ESDM Ministry Office on Friday, 3 July 2026. Ahmad Erani assessed that policy synchronisation between ministries and institutions is crucial at this time. According to him, legal certainty regarding the year’s regulation must be agreed upon so as not to hinder the downstream investment climate. “So, this concerns the use of that year. There needs to be an understanding between the Directorate General of Taxes, the Investment Coordinating Board, and the ESDM,” he added. This coordination step aims to ensure the eligibility of several joint ventures under the Dragon Project umbrella to receive the tax relief facility. The government wants to ensure all legal frameworks are aligned before making a final decision. “Yes, to ensure whether the Dragon project, CATL, and its joint ventures can obtain that capacity. That’s it,” said Ahmad Erani. When asked about the response from the tax authorities, Ahmad Erani confirmed that the process is still ongoing. Cross-agency meetings are continuing to harmonise these tax regulations. “It will still be harmonised between the Directorate General of Taxes and the Investment Coordinating Board,” he said briefly. For information, the strategic cooperation between CATL and IBC is realised through the establishment of a joint venture called Contemporary Amperex Technology Indonesia Battery (CATIB). The joint venture is currently building an integrated EV battery factory in Karawang, West Java. This mega project is targeted to begin commercial operations in July 2026 to strengthen the domestic EV ecosystem supply chain.