Question:
I am planning to buy an electric car because it was previously tax-free, but I have seen many news reports saying that in 2026 electric vehicles in Indonesia will now be subject to taxes. Is that true?

Thank you for the queries,
In essence, tax incentives for the ownership and purchase of electric vehicles (“EVs”) in Indonesia have been drastically reduced in 2026. As a result, electric vehicle owners will bear a greater tax burden compared to previous years.

Under the previous regulations, the purchase of electric vehicles automatically qualified for tax incentives, including:
1. Regional Taxes consisting of:
– Motor Vehicle Tax (“PKB”); and
– Transfer Fee for Motor Vehicle Ownership (“BBNKB”)
2. Value Added Tax (“VAT” / “PPN”) and Luxury Goods Sales Tax (“PPnBM”)
borne by the Government (“DTP”)

“In essence, buyers/consumers received tax reductions or even full exemptions from the taxes above when purchasing electric vehicles.”

In fact, when purchasing an electric vehicle, consumers could previously receive up to a 100% tax exemption. These tax incentives were introduced in Indonesia to accelerate the energy transition, reduce carbon emissions from the transportation sector, and encourage investment in the manufacturing ecosystem and downstream nickel industry.

However, effective from 1 April 2026, a new regulation came into force through Indonesia Minister of Home Affairs Regulation 11/2026 (“Permendagri 11/2026”), which amended the tax incentive provisions for electric vehicles in Indonesia.

In principle, the new regulation removes the exemption of electric vehicles from certain regional taxes. Consequently, electric vehicle purchases are now generally subject to regional taxes such as PKB and BBNKB. This means that electric vehicle owners are now required to pay annual vehicle taxes.

Currently, the regional tax obligations for electric vehicles are treated similarly to conventional vehicles. Although electric vehicles remain taxable objects under motor vehicle tax regulations, in certain situations they may still receive reduced tax rates depending on the policies of each regional government.

In addition, the VAT and Luxury Goods Sales Tax incentives also expired in April 2026. Therefore, electric vehicle buyers are now also burdened with these taxes. Although the Government has planned a new incentive scheme scheduled to take effect in June 2026, the technical regulations have not yet been officially issued.

As a result, many prospective EV buyers in Indonesia have started asking:
“If electric cars are now taxed, are they still cheaper than conventional cars?”

In many cases, taxes on electric vehicles are still lighter compared to conventional vehicles, but they are no longer entirely tax-free as before. Consequently, consumers will likely experience a significant increase in the purchase price of electric vehicles compared to previous years.

Lumin will explains the annual electric vehicle tax calculation in Indonesia as follows:
MOTOR VEHICLE TAX (PKB) CALCULATION FORMULA
First, the PKB calculation scheme is based on:
Motor Vehicle Sales Value (“NJKB”) × Weight Coefficient (road and environmental impact coefficient) × Tax Rate (determined by the relevant Regional Government).
– PKB Formula = NJKB × Weight × Tax Rate

The NJKB value is determined based on the General Market Price (“HPU”) listed in the appendix of Permendagri 11/2026. Meanwhile, the higher the Weight coefficient, the greater the tax imposed. For example:
– Minibus/Jeep: approximately 1.050
– Sedan: approximately 1.025
Furthermore, the Motor Vehicle Tax Base (“DP PKB”) is generally multiplied by a 2% tax rate.

NEW VAT AND LUXURY GOODS SALES TAX (PPnBM) SCHEME FOR ELECTRIC VEHICLES
Considering that the VAT and PPnBM incentives expired in April 2026, a new incentive scheme has been prepared by Minister of Industry, Agus Gumiwang Kartasasmita and approved by Coordinator Minister for Economic Affairs, Airlangga Hartarto, which is planned to take effect in June 2026.

The new scheme includes:
– 100% Government-Borne VAT (PPN DTP) for electric vehicles using Nickel-
based / Nickel Manganese Cobalt (NMC) batteries
– 40% Government-Borne VAT for electric vehicles using non-nickel batteries
– Purchase subsidy of IDR 5 million per electric motorcycle unit

Highlighting the incentives are limited to only:
– 100,000 electric cars
– 100,000 electric motorcycles

Note: the regulation hasn’t been published yet.

ELECTRIC VEHICLE TAX COMPONENTS
Based on the explanation above, the tax components applicable to electric vehicles that consumers should pay attention to are:
1. Motor Vehicle Tax (PKB)
2. PKB Surcharge (depending on regional government policy)
3. Mandatory Road Traffic Accident Fund Contribution (SWDKLLJ)
4. VAT (subject to incentive limitations)

CONCLUSION
Electric vehicles still receive several tax advantages compared to conventional gasoline or fossil-fuel vehicles. However, compared to previous regulations, electric vehicle tax incentives have been significantly reduced. In essence, consumers will now bear substantially higher annual taxes for owning electric vehicles compared to previous years.

Author : Jose Tjahjono, S.H., LL.M., CPLA.