Indonesia issues more tax incentives for EV sales

By Thomson Reuters Feb 20, 2024 | 9:53 PM

JAKARTA (Reuters) – Indonesia has announced new incentives to encourage sales of locally produced and imported electric vehicles (EVs), in its latest bid to boost take-up of environment-friendlier cars as well as attract investment to its domestic EV industry.

The detailed incentives are a follow-up to a December-announced tax incentives plan for imported EVs for manufacturers that match import numbers with domestically made EVs in coming years.

Under new rules made public late on Tuesday, Indonesia will remove luxury tax on EVs for the 2024 fiscal year and import tax until the end of 2025.

It will also lower value-added tax to 1% from 11% for EV buyers this year, extending a tax break that had expired at the end of 2023.

The incentives are aimed at stimulating domestic demand for EVs while attracting investment by automakers, the government has said.

Many EV makers have disclosed plans to launch vehicles to Indonesia since the government announced its intention to introduce incentives, said Rachmat Kaimuddin, deputy coordinating minister overseeing EV sector development.

China’s BYD, the world’s biggest EV maker by sales volume, last month unveiled three all-battery EV models it plans sell in Indonesia.

“Hopefully these efforts can result in even more products and make them more affordable,” Rachmat told reporters at a separate briefing.

The government aims for 600,000 EVs to be domestically produced by 2030. That would be more than 100 times the number sold in Indonesia in the first half of 2023.

It also aims to become an EV production hub, leveraging the country’s vast nickel reserves, an important material for EV batteries.

(Reporting by Fransiska Nangoy; Editing by Christopher Cushing)