The Indonesian government is finalizing fiscal incentive regulations for companies establishing electric vehicle (EV) manufacturing plants in the country. These regulations are expected to be completed no later than next month and will be issued before the end of the year. Rachmat Kaimuddin, the Deputy for Coordination of Infrastructure and Transportation at the Ministry of Maritime Affairs and Investment (Kemenkomarves), expressed the intention to create a policy for providing fiscal incentives to companies committing to building EV factories in Indonesia. The goal is to expedite the development of the electric vehicle industry in the country.
Adi Budiarso, the Head of the Financial Sector Policy Center at the Ministry of Finance (Kemenkeu), confirmed awareness of this plan and emphasized the need to promote environmentally friendly policies, particularly in relation to electric vehicles. The government has already provided tax incentives for electric vehicles, as outlined in Minister of Finance Regulation (PMK) Number 38 of 2023. These incentives include a 10% value-added tax (VAT) for electric cars and buses with a Domestic Component Level (Tingkat Komponen Dalam Negeri or TKDN) above 40% in line with the Ministry of Industry's program. As a result, the VAT applied is reduced to only 1%.
Additionally, there is a 5% VAT incentive for electric cars and buses with a TKDN between 20% and 40%, resulting in a 6% VAT. The government has also established subsidies in the form of a IDR 7 million discount for the purchase of a single electric motorbike based on one National Identification Number (NIK) from the identity card, which was in effect until the end of August 2023. These provisions are outlined in the Ministry of Industry Regulation Number 6 of 2023, which provides guidance on government assistance for the purchase of battery-based electric motor vehicles on two wheels.
