Sri Mulyani Exempts Motor Vehicle Tax Starting March 2021

Motorcycle assembly activities in one of the domestic production facilities. (Photo: Astra)

JAKARTA - The government through the Ministry of Finance (Kemenkeu) has prepared an incentive policy for reducing the PPnBM rate (tax discount) for motor vehicles.

This discount policy will be regulated through the issuance of a Minister of Finance Regulation (PMK) and is targeted to come into effect in March 2021. Meanwhile, the selected vehicle segments are class ≤ 1,500 cc for the sedan and 4x2 categories.

Head of the Communication Bureau of the Ministry of Finance, Rahmat Widiana, said that this decision was taken because this segment is the level that is of interest to the middle class and has local purchases above 70 percent.

"The tax discount will be carried out in stages until December 2021 in order to have an optimal impact", he said in a press statement, Friday, February 12.

Rahmat explained that a tax discount of 100 percent of the normal rate will be given in the first three months.

Then, 50 percent of the normal rate for the following three months, and 25 percent of the normal rate in the third stage for the next four months. The amount of tax discount will be evaluated for effectiveness every three months.

"The provision of motor vehicle tax discounts is supported by the policy of Bank Indonesia and the Financial Services Authority to encourage motor vehicle purchase credit, namely through the regulation of 0% down payment (DP) and a reduction in RWA Credit (Risk-Weighted Assets)", he said.

According to him, this combination of policies is expected to receive a positive response from producers and selling dealers to provide an attractive sales scheme so that the potential impact is more optimal.

"This tax discount also has the potential to increase the utility of automotive production capacity, increase the enthusiasm for the consumption of middle-class households and maintain the momentum for the recovery of economic growth that has become increasingly real", Rahmat concluded.