Supporting Energy Transition, Interior Minister Requests Abolition of Electric Vehicle Tax

Interior Minister (Mendagri) Muhammad Tito Karnavian has instructed all governors in Indonesia to provide fiscal incentives in the form of tax exemptions for owners of electric vehicles. This instruction is contained in Circular Letter (SE) Number 900.1.13.1/3764/SJ on the Provision of Fiscal Incentives in the Form of Exemption from Motor Vehicle Tax and Motor Vehicle Transfer Fee for Battery-Based Electric Motor Vehicles.

This directive is a follow-up to Presidential Regulation (Perpres) Number 79 of 2023 on Amendments to Perpres Number 55 of 2019 on the Acceleration of the Battery-Based Electric Motor Vehicle Programme (Battery Electric Vehicle) for Road Transport, as well as a follow-up to the Minister of Home Affairs Regulation (Permendagri) Number 11 of 2026.

Tito explained that the incentives provided consist of exemptions or reductions in regional taxes, including Motor Vehicle Tax (PKB) and Motor Vehicle Transfer Fee (BBNKB).

“The provision of incentives in the form of exemption or reduction of regional taxes in the form of PKB and BBNKB for Battery-Based Electric Motor Vehicles, including motor vehicles that have been converted from fossil fuels to Battery-Based Electric Motor Vehicles,” Tito stated in a written statement on Thursday (23/4/2026).

This step is taken to encourage energy efficiency, strengthen energy resilience, and support energy conservation in the transportation sector. In addition, this policy is also aimed at accelerating the transition to clean energy and maintaining more environmentally friendly air quality.

This instruction also considers the dynamics of the global economy that impact the instability of energy availability and prices, particularly oil and gas, which also affect domestic economic conditions. The provision of incentives for vehicles produced in 2026 and earlier has been regulated in Article 19 of Permendagri Number 11 of 2026.

In its implementation, governors are also requested to report the provision of fiscal incentives by attaching the Governor’s Decree to the Ministry of Home Affairs (Kemendagri) through the Directorate General (Ditjen) of Regional Financial Training (Keuda) at the latest by 31 May 2026.