Update on Indonesia’s Taxation Policy for Electric Vehicles: Withdrawal of Support to Electric Vehicles?
On March 6, 2026, the Minister of Home Affairs (the “MOHA”) issued Regulation Number 11 of 2026 on Bases for Imposing Motor Vehicle Taxes, Motor Vehicle Ownership Transfer Fees, and Heavy Equipment Taxes (the “Regulation”). The Regulation came into effect on April 1, 2026, and revoked the MOHA Regulation Number 7 of 2025 on Bases for Imposing Motor Vehicle Taxes, Motor Vehicle Ownership Transfer Fees, and Heavy Equipment Taxes of 2025 (the “Previous Regulation”).
Under the Regulation it is no longer express that on the motor vehicle taxes (Pajak Kendaraan Bermotor or the “PKB”) and Motor Vehicle Title Transfer Fees (Bea Balik Nama Kendaraan Bermotor or the “BBNKB”) are exempted for electric vehicles as expressly set out in the Previous Regulation. Please see below for more details.
♦ Removal of Express Tax Exemptions for Electric Vehicles
Under the Previous Regulation, specifically in Articles 3 and 6, it was clearly stipulated that electric vehicles were exempted from the PKB and the BBNKB. This policy appears to boost the public interest in purchasing electric vehicles as opposed to conventional combustion engine vehicles.
The Regulation alters the policy by not including electric vehicles, including those converted from fossil fuel-based vehicles, from the list of objects exempted from the PKB and the BBNKB. Instead, Articles 19(1) and (3) of the Regulation state that incentives shall be applied for the PKB and the BBNKB on electric vehicles based on applicable laws and regulations. The incentives are in the form of an exemption or a reduction of the PKB and the BBNKB without going into details regarding the exemption or reduction.
♦ Implementation of Regulation
Following the issuance of the Regulation and in an attempt to clarify the reduction or exemption of the PKB and the BBNKB, the MOHA issued Circular Letter No. 900.1.13.1/3764/SJ of 2026 to all Governors in Indonesia (the “Circular Letter”). As you may know, a Governor is the Head of a Province in Indonesia.
The Circular Letter states that the granting of the exemption of the PKB and the BBNKB incentives shall be determined by Governors by May 31, 2026. This means that there may not be a uniform or consistent reduction or exemption of the PKB and/or the BBNKB. In other words, Governors may issue different exemptions and/or reductions of the PKB and/or the BBNKB in different provinces.
AKSET
Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com) or Muhammad Dzaki Ramadhan Al Rizal (mrizal@aksetlaw.com) for further information or if you wish discuss the above.
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