Fiscal Incentives Encourage The Development Of Electric Motor Vehicle Ecosystems In Indonesia

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The government through the Ministry of Finance (Kemenkeu) stated that fiscal incentive programs play a strategic role in accelerating the development of the Battery-Based Electric Motor Vehicle (KBLBB) ecosystem in Indonesia.

Minister of Finance (Menkeu) Sri Mulyani said government support was realized in the form of subsidies for two-wheeled vehicles, both new motorbikes and conversion motors, which took effect earlier this week.

According to the Minister of Finance, facilities are also provided for four-wheeled vehicles, including buses to be announced in April.

It was stated that cumulatively the incentives from the fiscal taxation side that had been given to electric vehicles with an estimated lifetime would reach 32 percent of the selling price for electric cars and 18 percent for electric motors.

The value of government assistance is IDR 7 million per unit for new electric motors and conversions. This assistance only applies for the next two years to 1 million vehicles with a total budget requirement of IDR 7 trillion," he said as reported by the official website on Tuesday, March 21.

The Minister of Finance explained that beneficiaries for new electric motors will be given to MSMEs receiving KUR, recipients of productive assistance for micro or BPUM businesses and wage subsidy assistance, as well as recipients of electricity subsidies.

As for the conversion motorbike, there is no limit. However, for vehicle purchases, manufacturers must meet TKDN at least 40 percent and are not allowed to increase prices.

"Tax incentives are given by the government to pick up investments while still paying attention to the principle of level of playing field for each taxpayer, namely fiscal strengthening KBLBB with tax holidays of up to 20 years," he said.

The Minister of Finance added that the Sales Tax on Luxury Goods (PPnBM) for domestic electric cars and the Ministry of Industry's program was 0 percent compared to non-electric PPnBM vehicles of 15 percent.

Then, the 0 percent tariff for import duties is Completely Knock Down (CKD), and regional taxes are in the form of reducing the transfer fee for motorized vehicles (BBN) and motor vehicle taxes (PKB) by 90 percent.

"The acceleration of economic transformation to increase the attractiveness of investment in the KBLBB ecosystem, accelerating the shift from energy use, is also to increase public interest in electric vehicles," he concluded.