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February 29, 2024

Indonesia Extending Tax Incentives for EV Market

ev car battery
February 29, 2024

The Government of Indonesia is actively promoting electric vehicles (EVs) through extended value-added tax (VAT) relief measures for both domestically manufactured and imported EV’s. Effective in 2024, luxury tax on EVs will be eliminated, and import tax exemptions will extend until the end of 2025. Additionally, the VAT for the sale of electric cars and buses will be reduced from 11% to 1%, provided they incorporate at least 40% domestically manufactured components.
Following the government's incentive announcement, several EV manufacturers have expressed plans to launch vehicles to the Indonesian market. This initiative has recorded a notable surge in electric car sales in the past, with a 65% increase in December 2023 compared to November 2023 and a 33% rise compared to December 2022.
These incentives have significantly bolstered the adoption of eco-friendly automobiles and attracted investment. Indonesia has set ambitious goals to domestically produce 600,000 EVs by 2030 and aspired to become a global leading hub for EV production, leveraging its vast nickel reserves – a crucial material for EV batteries.

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