EV Tax Autonomy Sparks Uncertainty for Consumers and Industry

JAKARTA, KOMPAS.com – The policy of decentralising electric vehicle taxation through Minister of Home Affairs Regulation (Permendagri) Number 11 of 2026 is seen as potentially creating market imbalances across various regions. Instead of accelerating adoption, handing over taxation authority to provincial governments opens the door to the emergence of non-uniform regulations between regions. This situation could result in differing prices and ownership burdens for electric cars, depending on each region’s policies. Head of the Center of Industry, Trade and Investment at INDEF, Andry Satrio Nugroho, views the policy as sending confusing signals. On one hand, the central government is pushing for accelerated vehicle electrification, but on the other, it is providing fiscal policy space that could potentially misalign at the regional level. “When policy is handed over to the regions without strong guidelines, the results can vary. This risks creating market fragmentation,” Andry told Kompas.com on Monday (21/4/2026). According to him, a non-uniform market will make it difficult for producers to determine distribution and pricing strategies. In fact, market certainty is one of the important factors in attracting investment in the electric vehicle sector. Under the latest regulation, the certainty of tax exemptions for electric cars is no longer regulated nationally. Local governments now have the authority to determine tax amounts, including motor vehicle ownership transfer fees (BBNKB) and annual taxes. As an illustration, for an electric car priced around Rp 400 million, the ownership transfer fee burden could reach Rp 48 million, plus an annual tax of around Rp 5 million. These amounts could vary in each region, depending on the policies adopted. This situation is seen as potentially widening the gap in electric vehicle adoption between regions. Regions that continue to provide incentives are likely to develop faster, while those with high tax burdens risk falling behind. However, without consistent regulatory certainty, investors could hold back expansion or even divert investments to other countries offering more stable and competitive policies. On the other hand, the adjustment period given to local governments is considered too short. With a deadline of around 15 days, regions are deemed to lack sufficient time to conduct in-depth studies or public consultations before setting tax policies. As a result, the decisions made risk being suboptimal and adding to public confusion. INDEF assesses that if not evaluated soon, this policy could hinder the development of the national electric vehicle ecosystem. In fact, Indonesia has great potential, from mineral reserves, battery industry, to a vast domestic market.