Indonesia’s Finance Minister, Sri Mulyani Indrawati announced on Monday that the government is in the middle of ‘harmonizing the final draft’ to issue regulations that will provide Value-Added Tax (VAT) incentives of up to 10-percent this year on the purchase of electric cars and buses to accelerate the development of the national battery-based electric vehicle ecosystem, according to reporting from Antara News.
The Finance Ministry notified the House of Representatives (DPR) regarding the government’s plan for the provision of the incentives on March 17, 2023, she added.
Sri Mulyani said that a 10-percent VAT incentive would be provided for electric cars and buses with a domestic component level (TKDN) of above 40-percent, in accordance with the Industry Ministry’s requirements, which means only one percent VAT would be imposed on those products, as the Indonesian Government imposes an 11-percent VAT on every product, say Antara News.
Furthermore, electric cars and buses, which have a TKDN of above 20-percent to 40-percent, will be given a 5-percent VAT incentive, she said.
She added that the models and types of vehicles that have met TKDN requirements will be stipulated by an Industry Minister Regulation.
The Minister also said that the Energy and Mineral Resources (ESDM) Ministry as well as the Industry Ministry submitted their budget allocation proposals regarding the provision of VAT incentives to the Finance Ministry on February 16, 2023, and February 28, respectively.
“Later, the two ministries will prepare general guidelines and technical instructions (on the disbursement of the incentives) as well as discuss the budget with the related commission (of the DPR),” she added.
The provision of the incentives aims to expedite national economic transformation, increase investment attractiveness of the national battery-based electric vehicle industry, accelerate the energy transition from fossil to electric energy, and increase public interest in the utilization of electric vehicles.
Source: Antara News