automotive

Comprehensive! List Of Tax Incentives For The Automotive Industry 2025

The government has officially announced a series of tax incentives for the automotive industry in 2025. These incentives include support for battery electric vehicles (BEVs) as well as hybrid electric vehicles (HEVs). Coordinating Minister for Economic Affairs Airlangga Hartarto stated that a new policy has been introduced, which provides a 3% tax incentive for hybrid vehicles in the form of a reduced luxury tax (PPnBM DTP). This policy aims to boost the sales of hybrid cars in Indonesia and serves as compensation for the increase in the value-added tax (VAT) to 12% effective January 1, 2025. "The latest initiative is the PPnBM DTP for hybrid motor vehicles, where the government offers a discount or covers 3% of the tax," Airlangga mentioned during a press conference on the Economic Stimulus Package for Welfare on Monday, December 16, 2024.

In addition to the hybrid incentives, the government will continue to provide a 10% VAT exemption for the import of completely knocked down (CKD) electric vehicles. Furthermore, there will be a 15% PPnBM DTP for the import of both completely built up (CBU) and CKD electric vehicles, along with the elimination of import duties on CBU electric vehicles.

"In line with the ongoing program, the exemption for CBU imports is still in effect," Airlangga added. According to reports from Bisnis, several authorized automotive dealers (APM) have expressed their hopes for hybrid vehicle incentives, including PT Toyota Astra Motor (TAM) and PT Hyundai Motors Indonesia (HMID). For instance, Marketing Director of Toyota Astra Motor, Anton Jimmi Suwandy, emphasized that the new government should also support products that produce low emissions, particularly those manufactured domestically. "I believe it is reasonable for anyone, including the government, to support this. Especially since many of our products are already produced locally, such as the hybrid Innova Zenix, Yaris Cross, and several products that can utilize flexible fuel, whether biodiesel or bioethanol," Anton stated in Jakarta on Friday, September 6, 2024.

Comprehensive List of Tax Incentives for the Automotive Industry in 2025:

1. Provision of VAT incentives for Electric Vehicles (EV) with the following details:

- A 10% incentive on the delivery of specific four-wheeled EVs and certain EV buses with a minimum local content value (TKDN) of 40%; and

- A 5% incentive on the delivery of specific EV buses with a TKDN value ranging from 20% to less than 40%.

2. Provision of a 15% incentive on the import of certain completely built-up (CBU) four-wheeled Battery Electric Vehicles (KBLBB) and the delivery of domestically produced (completely knocked down/CKD) KBLBB.

3. Provision of a 0% import duty exemption for CBU EVs, in accordance with the existing program.

4. Provision of a 3% incentive on the luxury tax for hybrid motor vehicles.

Tag: Automotive Industry 2025 Value-added Tax VAT