VAT Incentive Continues, Electric Car Market Set to Reinvigorate

February 22, 2024, 12.05 AM  | Reporter: Dimas Andi
VAT Incentive Continues, Electric Car Market Set to Reinvigorate

TAX-JAKARTA. The government has finally confirmed the policy of Value Added Tax incentives borne by the Government (VAT DTP) for the purchase of electric cars will continue in 2024.

Through the Minister of Finance Regulation (PMK) No. 8 of 2024, the government cuts the VAT on electric cars by 10% from 11% to only 1% of the total selling price of the vehicle. Electric cars eligible for VAT incentives must be directly produced in Indonesia with a minimum Domestic Content Level (TKDN) value of 40%.

Currently, several models of electric cars are eligible for a 1% VAT incentive. Among them are Hyundai Ioniq 5 (TKDN 40%), Wuling Air ev (40.40%), Wuling BinguoEV (47.55%), and Chery Omoda E5 (40.50%).

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The Chairman of the Indonesian Motor Vehicle Industry Association (Gaikindo), Jongkie Sugiarto said, the Electric Vehicle Brand Holders (APM) are now studying PMK No. 8/2024. Gaikindo certainly hopes that the sales of electric cars in Indonesia will grow better in 2024 along with the continuation of the 1% VAT incentive from the government.

As an illustration, the wholesale sales (factory to dealer) of national electric cars in 2023 were recorded as many as 17,062 units.

Gaikindo also believes that the incentive will encourage more automotive manufacturers to invest in electric cars in Indonesia. "As a result, there are more choices of electric cars for Indonesian consumers," said Jongkie, Wednesday (21/2).

Chief Operating Officer of PT Hyundai Motors Indonesia (HMID) Franciscus Soerjopranoto said, his party supports the 1% VAT incentive policy continued by the government this year. "We believe that electric car sales will be larger in the future," he added, on Wednesday (21/2).

Just so you know, the Ioniq 5 was able to sell more than 7,000 units throughout 2023 thanks to the VAT incentive. This policy makes the price of the Ioniq 5 now reduced from IDR 703.8 million to IDR 805.5 million.

Sales and Marketing Director of Wuling Motors Dian Asmahani said the 1% VAT incentive will benefit consumers to switch to electric cars to support daily mobility. Wuling is now focusing on intensifying the marketing of its electric cars like Air EV and the latest model BinguoEV.

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"Along with the continuation of government policy, we hope that more and more people are interested in Wuling electric cars," said Dian, Wednesday (21/2).

Referring to Gaikindo data, Air EV was able to sell as many as 5,575 units wholesale in 2023. Now, the price of Air EV is estimated to start from IDR 190 million to IDR 275 million after the VAT incentive is deducted.

Meanwhile, the price of BinguoEV after the VAT incentive is estimated to start from IDR 317 million to IDR 372 million.

Meanwhile, Executive Director of Indef Tauhid Ahmad believes, the 1% VAT incentive policy is expected to boost electric car sales, although not at a significant level. The possibility of electric car sales is only seen massively in the Jabodetabek area.

Again, people still need time to understand the benefits of electric cars. In addition, the demand for electric cars must also be balanced by the massive development of charging stations throughout Indonesia. "Incentives for supporting facilities for electric cars also need to be intensified," he concluded, Wednesday (21/2).

Editor: Syamsul Azhar

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