Indonesia Indonesia’s new regulation defines scope of environmentally-friendly cars eligible for luxury tax reduction

Indonesia’s new regulation defines scope of environmentally-friendly cars eligible for luxury tax reduction

On December 31, 2021, the government of Indonesia established and enacted the Regulation of the Minister of Industry No. 36/2021 on Low Carbon Emission Four-wheeled Vehicles (hereinafter “the Regulation”). The Regulation defines the scope of low carbon emission vehicles (LCEVs). While the Decree No. 73/2019, the Regulation’s superordinate regulation, provides for a luxury goods sales tax imposed on LCEVs, the Regulation specifies detailed requirements for the LCEVs subject to mitigation of this tax. Specifically, such LCEVs consist of the following six types:

  1. KBH2 (energy-efficient and affordable four-wheel motor vehicles)—abbreviation for “Kendaraan Bermotor Roda Empat yang Hemat Energi dan Harga Terjangkau” in Indonesian
  2. Hybrid electric vehicles
  3. PHEV (plug-in hybrid vehicles)
  4. Battery-based electric vehicles
  5. FCEV (fuel cell electric vehicles)
  6. Flexible fuel vehicles

The Regulation can be downloaded at:
http://jdih.kemenperin.go.id/site/download_peraturan/2756

 

Requirements for eligible LCEVs

For example, to be eligible for the tax incentive, PHEVs shall:

    1. have fuel efficiency of more than 28 km per liter for both gasoline and diesel, or CO2 emission level of less than 100 g per kilometer;
    2. be able to perform a driving function powered solely by an electric motor (i.e., electric driving mode) for at least 40 km;
    3. have an external charging system (an external plug); and
    4. bear a PHEV technology logo.

Whereas battery-based electric vehicles shall:

    1. only use electric motors as their driving force;
    2. have a battery system as a rechargeable power source;
    3. have main components including electric motors, a battery, and power control units (PCUs) or rectifiers (inverters), at least;
    4. have an external charging system (an external plug); and
    5. bear a battery-based electric vehicle technology logo.

Enterprise Decision Letter and Vehicle Decision Letter

Manufacturers of eligible LCEVs shall prepare an Enterprise Application Form and a Vehicle Application Form in accordance with the formats stipulated in the Annexes of the Regulation and submit them to the Ministry of Industry. The Ministry will then issue two documents: an Enterprise Decision Letter and a Vehicle Decision Letter.

Author / Responsibility

AOKI Kenji

Senior Consultant, EnviX Ltd.
General Director, E&H Consulting Co., Ltd.

Business Performance

Expertise in EHS (environment, health and safety) consulting in ASEAN region.
- Environmental regulations updating
- Chemical regulations consulting

Background

MSc in Earth Science, The University of Tokyo

AOKI Kenji