Ministry of Industry Urges Gaikindo to Focus on Proposing Revisions to Luxury Goods Sales Tax Policy

The Ministry of Industry (Kemenperin) is urging the Indonesian Automotive Industry Association (Gaikindo) to promptly prepare proposals regarding revisions to the Luxury Goods Sales Tax (PPnBM) regulations, particularly for commercial vehicles. This follows the government’s plan to revise Government Regulation No. 73 of 2019, which was updated by Government Regulation No. 74 of 2021, scheduled for 2031.

Coordinator of the Directorate of Maritime Industry, Transportation Equipment, and Defence Equipment (IMATAP) at Kemenperin, Andi Komarai, expressed hope that the automotive industry and related stakeholders would immediately conduct the necessary studies and simulations.

The aim is for the industry to have concrete proposals ready to submit to the Ministry of Finance when the revision takes place.

“This momentum must be utilised as best as possible to influence tax policies that are more favourable to strengthening the domestic industry,” said Andi. One emerging proposal is adjusting PPnBM rates for commercial vehicles, differentiating between local and imported products.

Andi suggested that domestically produced trucks should continue to receive zero per cent PPnBM incentives, while imported trucks could be subject to higher rates of between 30 per cent and 50 per cent.

“Without supportive fiscal policies, this significant price difference could hinder the competitiveness of domestic products,” he added.

Currently, the PPnBM scheme is based on carbon emissions, fuel consumption, and vehicle type. Kemenperin is open to changing parameters and rates in the upcoming revision. In addition to controlling emissions, this policy is expected to serve as an instrument to develop a more competitive national industry.

The government hopes that through synergy between regulators and industry players, the PPnBM revision can create more adaptive policies that support the growth of the domestic automotive sector.