Electric Vehicles in NTB Still Tax-Free, Here Are the Considerations

The Provincial Government of West Nusa Tenggara (Pemprov NTB) is exempting Motor Vehicle Tax (PKB) and Motor Vehicle Transfer Duty (BBNKB) specifically for Battery-Based Electric Motor Vehicles (KBLBB). This policy is part of an effort to encourage the use of environmentally friendly vehicles in NTB. The Secretary of the NTB Regional Revenue Agency (Bapenda), Muhammad Zuhudy Kadran, explained that this incentive policy refers to Circular Letter (SE) Number 900.1.13.1/3764/SJ from the Ministry of Home Affairs (Kemendagri). The circular instructs all governors in Indonesia to provide full local tax exemptions specifically for KBLBB. “We are still following the central government’s policy. For electric vehicles, a tax exemption or reduction incentive is provided as long as the circular has not been revoked,” said Zuhudy when met at the NTB Governor’s Office. In terms of regulations, this tax exemption is confirmed not to violate the rules because the central government has appealed to all regions to exempt or reduce the tax burden on electric vehicles. However, he explained that regions actually have the authority to begin collecting a portion of the electric vehicle tax. “If collected, according to the Ministry of Home Affairs circular, they can pay 25 percent of the principal tax. For example, what should be paid is Rp 1 million, they pay Rp 250 thousand,” he said. Currently, the NTB Provincial Government has included the plan to impose a tax on electric vehicles into the revision of the Regional Regulation (Perda) on Regional Taxes and Regional Levies (PDRD). However, this regulation is still awaiting approval from the Governor of NTB. Zuhudy emphasised that the plan to collect taxes in the future does not mean the government does not support environmental programmes. “We follow the provisions from the tax principal. So, collecting this tax is not inconsistent with net zero emission, it runs side by side,” he stressed. The fundamental reason behind the plan to collect this tax is the principle of fairness in public facilities. Electric vehicles have the same status as conventional vehicles in using public roads built with state funds. “Because roads need repairs, they must have a contribution in their taxes. It’s just that there is a policy to try to zero it out first to attract public interest in using electric vehicles,” said Zuhudy. Zuhudy revealed the formulation for calculating the electric vehicle tax later on. The amount is calculated based on the Motor Vehicle Sales Value (NJKB) multiplied by the BBNKB rate of 1.025 percent, then charged 25 percent of the tax principal. According to Zuhudy, the motor vehicle tax rate in NTB is currently among the lowest compared to Bali and East Nusa Tenggara (NTT). In addition, the BBNKB rate for new vehicles in NTB is also lower than several other regions. “NTB’s tax rate is the lowest compared to Bali and NTT at 1.025 percent. Our rate is among the lowest. The BBNKB is also low, if people buy a new vehicle we charge 9 percent. Other provinces charge 12 percent,” he explained. Regarding tax classification, electric vehicles are planned to be subject to relatively uniform rates. Unlike conventional vehicles, which are calculated based on engine capacity (cc), electric vehicles use a kilowatt-hour (kWh) power parameter. Meanwhile, for hybrid vehicles, the taxation scheme will follow the provisions for conventional vehicles. “For conventional vehicles, you see the tax amount based on the CC. For electric vehicles, it’s based on kWh. But we plan to average it out. Except for hybrids, they are taxed as conventional vehicles,” concluded Zuhudy.