Middle Ground: Indonesia's Tax Incentives for Hybrid Cars

Tax system

The Indonesian government has crafted a specialized fiscal scheme for hybrid vehicles. Taufiek Bawazier, the Industry Ministry's Director General of Metal, Machinery, Transportation Equipment, and Electronics Industry, stated that incentives would be provided for hybrid cars as a transitional step from Internal Combustion Engine (ICE) vehicles to electric vehicles (EVs). "We propose specific instruments that will add value to the industry," he said on Mar. 28.

Coordinating Economic Affairs Minister Airlangga Hartarto mentioned that the incentives would be government-borne value-added tax (VAT). The amount of VAT to be borne by the government for hybrid cars is planned to be the same as the incentive provided for electric vehicles. "We will discuss this with the technical ministries; we are currently evaluating," he said. According to Airlangga, the government is still calculating the impact of incentives on hybrid cars' selling prices.

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