Finance Minister Rolls Out 5% Threshold for PPnBM
The Indonesian Finance Minister, Sri Mulyani Indrawati, has announced the implementation of a new 5% PPnBM threshold for "full-electric, battery-based electric motor vehicles" in Indonesia. This policy is effective from March 1, 2024, and will significantly impact the local electric vehicle market.
According to the Minister, this move is part of the government's efforts to accelerate the transition to electric vehicles in Indonesia. By lowering the PPnBM (Value-Added Tax on Luxury Sales), the government aims to promote electric vehicle ownership and reduce dependence on imported oil.
Under the new policy, all electric vehicles with an off-the-road price below IDR250 million will be subject to a 5% PPnBM rate. Vehicles with an off-the-road price between IDR250 million and IDR500 million will be subject to a progressive PPnBM rate.
Previously, all electric vehicles were subject to a 15% PPnBM rate. This policy effectively reduces the tax burden for lower-priced electric vehicles, making them more accessible to consumers.
The implementation of the 5% PPnBM threshold is expected to have several positive impacts on the Indonesian electric vehicle market:
The lower tax rate will reduce the overall cost of electric vehicles, making them more affordable for consumers. This is likely to lead to an increase in electric vehicle sales and a shift away from internal-combustion engine vehicles.
By reducing the tax burden, the government aims to encourage domestic production of electric vehicles. This could lead to the development of new manufacturing facilities and supply chains, creating jobs and boosting the local economy.
The promotion of electric vehicles will reduce air pollution and carbon emissions. Electric vehicles produce zero emissions during operation, making them a more environmentally sustainable transportation option.