Industry Ministry: Update on Electric Vehicle Incentives for This Year Still Unclear

JAKARTA - The Ministry of Industry (Kemenperin) has indicated that there are currently no new developments regarding fiscal incentives for domestic electric vehicle purchases after their validity period expires in December 2025. The policies set to expire include 10% VAT covered by the government and exemptions from import duties for imported battery-based electric vehicles, along with a 3% discount on the Luxury Goods Sales Tax (PPnBM) for hybrid electric vehicles (HEV). Director General of Metal, Machinery, Transportation Equipment, and Electronics Industry (ILMATE) at Kemenperin, Setia Diarta, stated that the government is still in the discussion stage regarding the continuation of these incentives. “The position is in the discussion stage; there has been no decision yet,” said Setia. The policy framework for low-emission vehicles through the Low Carbon Emission Vehicle (LCEV) programme is based on Government Regulation (PP) No. 73 of 2019, which has been revised to PP No. 74 of 2021 concerning taxable luxury goods in the form of motor vehicles subject to PPnBM. The technical regulations are also outlined in Ministry of Industry Regulation No. 36 of 2021, promulgated on 31 December 2021. Under these regulations, hybrid vehicles are subject to a base PPnBM rate of 15% with a tax base of 46 and two-thirds percent of the selling price, resulting in an effective PPnBM rate of around 7% for hybrid vehicles. Meanwhile, for plug-in hybrid electric vehicles (PHEV), the PPnBM rate is also 15%, but with a tax base of 33 and one-third percent of the selling price, yielding an effective rate of approximately 5%. “We also hope that at least non-fiscal facilities will still be enjoyed by our friends who use electric vehicles,” Setia concluded.