Indonesia's Incentive for Hybrid Car Makers

The Indonesian government is offering a 3% tax incentive to hybrid car manufacturers, according to Minister of Industry Agus Gumiwang Kartasasmita. At a recent press conference, he emphasized the importance of registering hybrid car models with the government to benefit from the PPnBM incentive.

The government estimates a budget requirement of IDR840 billion (US$52.5 million) to provide this sales tax incentive for hybrid motor vehicles. Under Regulation No. 36 of 2021, which deals with low-carbon four-wheeled vehicles, the government mandates a local component value (TKDN) for hybrid car manufacturers participating in the program.

Beyond hybrid vehicles, the government also offers a range of other incentives, such as a 10% reduction in value-added tax (VAT) on imported fully built battery-operated vehicles with a local content (TKDN) rate of 40%, and 5% for electric buses with a TKDN rate of 20-40%. There's also a 15% sales tax on fully imported or completely knocked-down vehicles and a 0% import tax on fully built battery-operated vehicles. Electric vehicles imported as fully built or completely knocked down can benefit from a 100% sales tax exemption. The total budget needed for these incentives is estimated at around IDR2.52 trillion ($157.4 million).