Determination Of 2023 Motor Vehicle Tax (PKB) And Exemption Of Duty On The Transfer Of Motor Vehicle Ownership (BBNKB) And PKB For Electric Vehicles (EV)

Table of Contents

1. Overview
2. Subject of Tax Imposition
3. Tax Exemption for EV
4. What it means for the future of EV industry in Indonesia?

Overview

On 11 May 2023, the Minister of Home Affairs (MoHA) of Republic Indonesia promoted MoHA Reg No. 6 of 2023 regarding Basis for the Imposition of Motor Vehicle Tax (Pajak Kendaraan Bermotor – PKB) ¹, Duty on the Transfer of Motor Vehicle Ownership (Bea Balik Nama Kendaraan Bermotor - BBNKB) ², and Heavy Equipment Tax (Pajak Alat Berat – PAB) ³ for 2023 (“MoHA Reg 6/2023”).

Through this new regulation, Indonesian government consistently continue to commit with energy transition by giving incentives in the Electric Vehicle (EV) industry by imposing 0% (zero percent) PKB and BBNKB for EV.

The MoHA Reg 6/2023 has been in effect since 11 May 2023 and revokes the previous regulation.

Subject of Tax Imposition

In this regulation, Motor Vehicle is the main subject of tax imposition which consist of (i) all wheeled vehicles, and their trailers used on various types of land roads (including EV); (ii) vehicles operated in water which is powered by technical equipment in the form of motors; or (iii) other equipment, which function to convert a specific energy resource into a driving force for the relevant motor vehicle. ⁴

This ARMA Update will discuss the calculation of PKB, especially on the special policy of PKB for EV, apart from the determined PKB contained in the appendix of MoHA Reg 6/2023.

Tax Exemption for EV

Under the previous regulation, EV (including the EV that used as public transportation) was imposed the PKB and BBNKB for only 10% of its base imposition.

For reference, if an EV has NJKB (Nilai Jual Kendaraan Bermotor or Motorized Vehicle Sales Value) ⁵ in amount of Rp500,000,000 (five hundred million Rupiah), thus the PKB shall be:

    Previous EV’s PKB 
      = 10% x [2% x Rp500,000,000] 
      = 10% x [Rp10,000,000]
      = Rp1,000,000	

However, through the enactment of MoHA Reg 6/2023, the imposition of PKB and BBNKB for EV is set at 0% of the base imposition.

In this context, EVs are now free of BBNKB and PKB.

What it means for the future of EV industry in Indonesia?

By issuing incentives in form of tax exemption in the downstream of EV industry, it is not impossible that Indonesian government will also giving more incentives, exemptions or any ease of access to the upstream of EV business. Meaning that, any major investment in regards with EV industry, or related to energy transitions, will be heavily supported by Indonesian government for upcoming years.

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1. Based on Article 1 (3) of MoHA Reg 6/2023, PKB is tax on the ownership and/or control of a motor vehicle.↩

2. Based on Article 1 (4) of MoHA Reg 6/2023, BBNKB is tax on the transfer of ownership rights of a motor vehicle as a result of an agreement between two parties or a unilateral action or a condition that occurs due to sale and purchase, exchange, grant, inheritance, or entry into a business entity↩

3. Based on Article 1 (3) of MoHA Reg 6/2023, PAB is tax on the ownership and/or control of a heavy equipment↩

4. Article 1 (1) of MoHA Reg 6/2023↩

5. NJKB is the general market price of a motorized vehicle determined by the government.↩

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Disclaimer:
This client update is the property of ARMA Law and intended for providing general information and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. ARMA Law has no intention to provide a specific legal advice with regard to this client update.

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