Government introduces tax exemption for ethanol and fuel blends

Government has officially issued new regulations on tax exemption procedures through Ministry of Finance Regulation (PMK) No. 34 of 2026. The regulation revises PMK No. 82 of 2024 and aims to support national energy resilience and accelerate the transition to clean energy. Under the new rule, the Ministry of Finance has expanded tax exemption provisions for ethanol blended with refined petroleum products, particularly in the production of biofuels (BBN). A key change is added to Article 8 of PMK 82/2024, allowing multiple businesses to share ethanol storage facilities within an approved industrial zone, subject to permission or recommendation from the ministry overseeing energy and mineral resources. However, operators managing shared storage must maintain detailed records of ethanol receipts, usage, distribution, and stock levels for each user. The regulation also clarifies administrative requirements for companies seeking tax exemptions, including mandatory documents such as tax identification numbers, manufacturing or processing industry permits, site plans, production capacity data, and descriptions of production processes and usage of taxable goods. Specifically for the biofuel industry, the government confirms that blending refined petroleum products with ethanol now falls under manufacturing or processing industries eligible for tax exemption.