Indonesia plans tax changes to drive output, exports of greener cars


  • Auto
  • Monday, 11 Mar 2019

The import tax will be raised to up to 10 percent on 1,147 mostly consumer goods, from an existing 2.5 percent to 7.5 percent, effective next week, Finance Minister Sri Mulyani Indrawat(pic)i told a news briefing.

JAKARTA: Indonesia plans to revise its luxury tax scheme for cars to encourage production of environmentally friendly vehicles and to help promote Southeast Asia's biggest economy as a regional hub for exports, ministers said on Monday.

During a consultation with a parliamentary committee, Finance Minister Sri Mulyani Indrawati said Indonesia aimed to overhaul its existing scheme so charges were no longer based on engine capacity, but on fuel consumption and carbon emissions.

The government plans to charge an 8 percent luxury tax for cars running on renewable fuel, including palm oil-based fuel, no taxes for electric vehicles (EVs) and to cut taxes for hybrid cars, Indrawati said. The maximum ceiling for taxes will be 70 percent.

Indonesia currently taxes vehicles in a range of between 0 percent to 125 percent depending on engine capacity, the size of the car, the type of fuel it uses and whether it is two- or four-wheel drive.

"We need to support the transportation industry with a technology that is more competitive," Indrawati said.

"This is also in line with global concerns on climate change with CO2 emissions becoming a bigger concern for the automotive industry," she said, adding that based on an assessment by her ministry, the change would result in higher government revenue.

Industry Minister Airlangga Hartarto said the tax overhaul was also intended to support higher production of sedans in Indonesia, which could be exported to Australia.

Jakarta and Canberra recently signed a free trade agreement eliminating Australian import tariffs for cars produced in Indonesia.

The country is trying to replace Thailand as a regional hub for cars. Hartarto said in 2018 Indonesia produced 1.3 million cars and exported 346,000 units, below Thailand's 2.2 million car production and its 1.1 million exports.

Indonesia plans to start processing its rich supplies of nickel laterite ore for use in lithium batteries to become a global hub for producing and exporting EVs to Asia and beyond.

Indrawati told the parliamentary committee the new taxes would be applied from 2021 following industry consultation and to allow manufacturers to scale up technology. - Reuters
Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!

Indonesia , tax , exports , cars , greener , Mulyani , Indrawati , parliament ,

   

Next In Business News

Southern Cable proposes 1-for-2 bonus issue of warrants
Tengku Zafrul: Govt committed to strengthen budget 2023 preparation process
Scomi Energy gets nod to dispose of oilfield services division for RM21mil
Gamuda: SSPAs of four expressway concession companies executed
Stella Holdings wins RM33.88mil contract from PAAB
Bursa Malaysia cautious ahead of GDP data
MoF monitoring effects of OPR hike on consumer loan repayments
MFM denies Dindings Poultry is part of cartel
Oil bounces as China, U.S. data ease recession concerns
SoftBank posts US$17bil Vision Fund loss on tech slump

Others Also Read