JAKARTA – Indonesia will offer a sales tax incentive on Government-borne Luxury Goods (PPnBM DTP) of 3 per cent for hybrid cars from next year.

Minister of Industry (Menperin) Agus Gumiwang Kartasasmita said at a press conference on Monday that the Indonesian government asks hybrid car makers to register their hybrid car models with the government to get the PPnBM incentive.

To provide the sales tax incentive for hybrid motor vehicles, the cabinet estimates a budget requirement of 840 billion Indinesian rupiahs (approximately US$52.5 million). Agus stated that under Regulation 36 from 2021 concerning low-carbon four-wheeled vehicles, the government mandates a local component value (TKDN) for hybrid car manufacturers participating in the programme.

In addition to hybrid vehicles, the government offers several incentives, including a 10 per cent reduction in value-added tax (VAT) on imported fully built battery-operated vehicles (including passenger and electric cars, and electric buses) with a local content (TKDN) rate of 40 per cent, and 5 per cent for electric buses with a TKDN rate of 20-40 per cent.

There is also a 15 per cent sales tax on fully imported or completely knocked-down vehicles and a 0 per cent import tax on fully built battery-operated vehicles. A 100 per cent sales tax exemption applies to certain electric vehicles imported as fully built or completely knocked down.

The total budget needed for these incentives is estimated at around 2.52 trillion Indonesian rupiahs ($157.4 million). — VNS