Indonesia Boosts Electric Car Sales with New Tax Incentives

Indonesia is rolling out fresh tax incentives to encourage the purchase of electric vehicles (EVs), both those produced domestically and imported from abroad. The move aims to promote the adoption of eco-friendly cars and attract investment to the country's growing EV industry.

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The newly announced incentives build upon a previous plan from December, which targeted tax breaks for imported EVs and sought to align import numbers with locally made EVs in the coming years.

According to the latest regulations revealed on Tuesday, Indonesia will waive luxury tax on EVs throughout the 2024 fiscal year and eliminate import tax until the end of 2025. Additionally, the value-added tax (VAT) for EV buyers in 2024 will be slashed from 11% to just 1%, extending a tax benefit that expired at the close of 2023.

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These incentives have a dual purpose: to stimulate demand for EVs within Indonesia and to attract investment from automakers into the country's burgeoning EV sector.

Rachmat Kaimuddin, deputy coordinating minister overseeing EV sector development, highlighted the positive response from EV manufacturers following the government's announcement of incentives. Notably, China's BYD, the world's leading EV manufacturer, recently unveiled plans to introduce three all-battery EV models in Indonesia.

"We hope these efforts will lead to a wider range of EV products at more affordable prices," Rachmat commented during a briefing with reporters.

Looking ahead, Indonesia has ambitious goals for its EV industry, aiming to produce 600,000 EVs domestically by 2030, a significant increase from current sales figures. Additionally, the country aims to position itself as a global EV production hub, leveraging its abundant nickel reserves, a vital component in EV batteries.

Also Read: New EV Tax Credit 2023: List of Electric Vehicle Models Eligible for Up to $7,500 in New Tax Credits