SURABAYA - Electric vehicles based on renewable energy will be exempt from vehicle tax  start from January 5, 2025 . In addition to the PKB, the delivery of vehicles based on renewable energy will also not be subject to title fee for transfer motorized vehicle (BBNKB).

This policy is contained in Law Number 1 of 2022 concerning Financial Relations between the Central Government and Regional Governments Law (“Hubungan Keuangan Antara Pemerintah Pusat dan Pemerintahan Daerah” or HPKD). Provisions for the exemption of the PKB are regulated in Article 7 paragraph (3) letter d of the Financial Relations between the Central Government and Regional Governments Law . Meanwhile, for the BBNKB is regulated in Article 12 paragraph (3) letter of the Financial Relations between the Central Government and Regional Governments  Law. 

"Provisions regarding vehicle tax, fee for transfer motorized vehicle, Non Metal Rock Mineral Tax, vehicle tax Opsen (additional tax), fee for transfer motorized vehicle Opsen, and Non Metal Rock Mineral  Opsen as stipulated in this Law shall come into effect 3 years from the date of promulgation of this Law," reads Article 191 paragraph (1) of the Financial Relations between the Central Government and Regional Governments  Law .

The Directorate General of Fiscal Balance revealed that this policy was motivated by Indonesia's commitment to achieve net zero emissions through the National Determined Contribution (NDC), one of which is by reducing CO2 from fossil fuel motorized vehicles.

In addition, this policy also encourages the acceleration of the motor vehicle conversion program from fossil fuels to motorized vehicles based on renewable energy which are more environmentally friendly.

Before the Financial Relations between the Central Government and Regional Governments  Law  was published, provisions regarding vehicle tax and fee for transfer motorized vehicle were regulated in Law Number 28 of 2009 concerning Regional Taxes and Regional Retribution (“Peraturan Daerah dan Retribusi Daerah” or PDRD). The PDRD Law stated that vehicles based on renewable energy are included as PKB and BBNKB objects. Tax relief in the form of a reduction in the amount of the Basic Tax Imposition (DPP) for Battery-Based Electric Motorized Vehicles (KBLBB) of 20-30% of the DPP that should be (2020) and 10% of the DPP that should be (2021-2022). However, in the HKPD Law, objects are excluded from PKB and BBNKB.

Sourced from the Regulation of the Minister of Industry Number 6 of 2022, the target for the development of the 2nd and 3rd wheel KBLBB industry in 2020 is 5,000 units, in 2025 2nd and 3rd wheel KBLBB industry is 6 million and the 4th wheel or more is targeted at 400 thousand units.

In 2030 the target for 2 and 3 wheeled KBLBB is 9 million units, while 4 wheelers or more are 600 thousand units. And the peak is in 2035, 2 and 3 wheeled KBLBB are targeted at 12 million while 4 or more wheeled KBLBB are 1 million units.