Indonesia relaxes tax rules on EV imports to attract investment

Published: 04.01.2024 Related countries:  Indonesia Indonesia

Indonesia will grant automakers that plan to build electric vehicle plants tax incentives on their imports of completely built-up EVs until 2025, a new presidential regulation showed as Jakarta seeks to attract more investment.

The new regulation signed on Dec. 8 and released this week, companies that have invested in EV plants, are planning to increase their EV investments, or planning to invest would be eligible for the incentives.

The new rules will remove the import duties and the luxury-goods sales tax on the built-up vehicles brought into the country and gives incentives on taxes collected by provincial governments. Earlier rules only granted these incentives to imports of knocked-down vehicles, which are delivered in parts and assembled in the country where they are sold. Indonesia is Southeast Asia's biggest auto market.

The new regulations also delayed a deadline requiring companies to produce at least 40% of the content of EVs in Indonesia until 2026 from 2023. Also the decree delays an increase in the local content threshold to 60% to 2027 from initial target of 2024. Indonesia's government has set an ambitious target of producing some 600,000 EVs by 2030. That would be more than 100 times the number sold in Indonesia in the first half of 2023. Some companies including Hyundai have invested in Indonesia followed by investment commitments by China's Neta EV brand and Mitsubishi Motors. Indonesia is also wooing Tesla and China's BYD.


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