Important To Know, These Are Types And Specifications Of Vehicles Affected By 12 Percent VAT

The atmosphere of the GIIAS 2024 exhibition at the Indonesia Convention Exhibition (ICE) BSD July 2024. (Photo: Irfan Meidianto / VOI)

JAKARTA - Earlier this year, President Prabowo Subianto officially approved an increase in Value Added Tax (VAT) rates from the previous 11 percent to 12 percent for goods and services that fall into the luxury category.

The 12 percent increase in VAT also has an impact on vehicles sold in the Indonesian automotive market. Even so, there are several special specifications that are affected by the 12 percent increase in VAT.

This has been stated in the Minister of Finance Regulation number 141/PMK.010/2021 concerning the Determination of Types of Motorized Vehicles subject to Sales Tax on Luxury Goods and Procedures for Imposition of Free Administration and Entrepreneurship, and Return of Sales Tax on Luxury Goods.

Quoted from ANTARA, Friday, January 3, in the Ministerial Regulation, if you look at article 2 paragraph 1, there are several detailed specifications for luxury vehicles in the form of motorized vehicles transporting people for transportation of less than 10 (ten) people including drivers with a cylinder capacity of up to 3,000 (three thousand) cc, which is subject to PPnBM at different rates.

The rates are available from 15 percent, 20 percent, 25 percent, to 40 percent. This depends on the type and also the specifications.

Meanwhile, paragraph 2 also explains that there are different rates, such as 40 percent, 50 percent, 60 percent and also 70 percent. This is also in accordance with the types and specifications ranging from 3,000 cc to 4,000 cc.

Not only four-wheeled, motorbike-type vehicles are also subject to different tax rates in accordance with those contained in Articles 22 and also 23.

Article 22 reads, 2 (two) or 3 (three) wheeled motorized vehicles with cylinder contents of more than 250 (two hundred and fifty) cc to 500 (five hundred) cc; or special vehicles made for travel in snow, on beaches, on mountains, or similar vehicles, which are subject to PPnBM at a rate of 60 percent.

Furthermore, article 23 also explains taxable vehicles such as motorized vehicles with a cylinder capacity of more than 4,000 (four thousand) cc; 2 (two) or 3 (three) wheeled motorized vehicles with a cylinder capacity of more than 500 (five hundred) cc; or trailers, semi-triallers of the caravan type, for housing or tents, which are subject to PPnBM at a rate of 95 percent.

"Today the government has decided to increase the VAT rate by 11 percent so 12 percent is only imposed on luxury goods and services. I repeat to make it clear, the increase in VAT from 11 percent to 12 percent is only imposed on luxury goods and services," said President Prabowo at a press conference at the Ministry of Finance in Jakarta, Tuesday, December 31. "For example, private jets. That is classified as luxury goods used or used by the upper class. Cruise ships, yachts, yachts, very luxurious houses. That is, for goods other than being classified as luxury goods there is no increase in VAT. It remains as large as it is now, which since 2022," added Prabowo.