Electric Vehicle Tax Incentives Deemed Halfway There, Here's Why

JAKARTA - The electric vehicle tax policy is once again under scrutiny. Although the government has requested tax exemptions through a circular letter, this step is deemed insufficient in providing certainty as it lacks a clear time limit. This situation makes the electric vehicle incentive policy appear “halfway there”. On one hand, there are efforts to encourage adoption through tax exemptions, while on the other, the underlying regulations permitting tax levies remain in place and unrevised. Andry Satrio Nugroho, Head of the Center of Industry, Trade and Investment at INDEF, assesses that this could potentially cause confusion among stakeholders, both at the local government level, industry actors, and consumers. “When it’s only in the form of a circular letter and without an implementation time mechanism, consumers and industry actors are still not confident enough,” he told Kompas.com on Friday (24/4/2026). From the consumer side, this lack of clarity could influence decisions to purchase electric vehicles. The public is still haunted by the possibility of future policy changes, including the risk of increased ownership costs. This situation is further complicated by differences between higher-level regulations and derivative policies. Previous regulations still allow room for local governments to impose taxes, while the circular letter requests exemptions. Andry believes that a more appropriate step would be to revise the existing regulations to align them and provide legal certainty. In this way, the resulting policy would not only be temporary but could also serve as a long-term reference. According to him, regulatory certainty is a key factor in promoting the domestic electric vehicle ecosystem. Without such clarity, the incentives provided could be ineffective in accelerating adoption.