Indonesia Offers More Tax Incentives for Electric Vehicle Sales

tendata blogTrade Trends News

ten data blog26-02-2024

Indonesia has announced new incentives to encourage the sale of locally produced and imported electric vehicles (EVs) in its latest move to promote the use of environmentally friendly vehicles and attract investment in its domestic EV sector.


The detailed incentives are a follow-up to the tax incentive program for imported EVs announced in December, which targeted manufacturers to match the number of imports with domestically produced EVs over the next few years.


Under the new rules announced Tuesday night, Indonesia will eliminate the luxury tax on electric vehicles in fiscal year 2024 and the import tax by the end of 2025.


This year, the government also reduced the value-added tax (VAT) for EV buyers from 11 percent to 1 percent, extending a tax break that expired at the end of 2023.


The government says these incentives are intended to stimulate domestic demand for electric vehicles while attracting investment from automakers.


Since the government announced its intention to introduce the incentives, a number of electric car makers have disclosed plans to roll out their vehicles to Indonesia, said Rachmat Kaimuddin, deputy coordinating minister for the development of the electric vehicle industry.


China's BYD (002594.SZ), the world's biggest electric car maker by sales in opening new tabs, last month unveiled three all-battery electric car models it plans to sell in Indonesia.


"Hopefully these efforts will lead to more products and make them cheaper," Rahmat told reporters at another briefing.


The government aims to produce 600,000 electric vehicles by 2030 in the country. That would be more than 100 times Indonesia's sales in the first half of 2023.


It also aims to use the country's abundant reserves of nickel, a key material for EV batteries, to become a center for EV production.


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