Value Added Tax (VAT) for Electric Motor Vehicles

The Indonesian Tax Authority (ITA) has enacted a new regulation, Minister of Finance Regulation Number 8 of 2024 (PMK 8/2024), concerning Value Added Tax on the Delivery of Certain Four-Wheeled Battery Electric Vehicles and Certain Battery Electric Buses Covered by the Government. Additionally, ITA issued Minister of Finance Regulation Number 9 of 2024 (PMK 9/2024) regarding Luxury Goods Sales Tax on the Import and/or Delivery of Certain Four-Wheeled Battery Electric Vehicles (KBLBB) Covered by the Government for the 2024 Fiscal Year. Both regulations became effective on February 15, 2024.

Minister of Finance Regulation Number 8 of 2024:

This regulation aims to continue the government’s support from the previous year by providing fiscal incentives in the form of Value Added Tax on the delivery of certain four-wheeled battery electric vehicles and certain battery electric buses covered by the government in 2024. PMK 8/2024 stipulates:

• Period and Criteria for the Delivery of Certain Four-Wheeled Battery Electric Vehicles and Certain Battery Electric Buses Covered by the Government:

The VAT due on the delivery of certain four-wheeled Battery Electric Vehicles (KBL) and/or certain Battery Electric Buses to buyers in the form of registration as new motor vehicles is covered by the government for the fiscal year 2024 (January – December 2024).

Certain Four-Wheeled Battery Electric Vehicles and Certain Battery Electric Buses covered by the government must meet the following Domestic Component Level (TKDN) criteria:

1. At least 40% for Certain Four-Wheeled Battery Electric Vehicles and Certain Battery Electric Buses.
2. At least 20% to less than 40% for Certain Battery Electric Buses.

The VAT rate covered by the government for the delivery of Certain Four-Wheeled Battery Electric Vehicles and Certain Battery Electric Buses is as follows:

1. 10% of the selling price for the delivery of Certain Four-Wheeled Battery Electric Vehicles and Certain Battery Electric Buses with a TKDN of at least 40%.
2. 5% of the selling price for the delivery of Certain Battery Electric Buses with a TKDN of at least 20% to less than 40%.

• Realization Report of VAT Covered by the Government:

Taxable Entrepreneurs (PKP) who deliver Certain Four-Wheeled Battery Electric Vehicles and/or Certain Battery Electric Buses are required to issue tax invoices in accordance with the provisions in the taxation regulations and prepare a realization report of the VAT covered by the government.

The provisions for issuing tax invoices for the delivery of Certain Four-Wheeled Battery Electric Vehicles and Certain Battery Electric Buses with VAT covered by the government are as follows:

1. For Certain Four-Wheeled Battery Electric Vehicles and Certain Battery Electric Buses with VAT covered by the government amounting to 10% of the selling price, two tax invoices must be issued:

• A tax invoice with transaction code 01 for 1/11 of the selling price that does not receive the VAT covered by the government facility.
• A tax invoice with transaction code 07 for 10/11 of the selling price that receives the VAT covered by the government facility with the statement “VAT Covered by the Government According to PMK Number 8 of 2024.”

2. For Certain Battery Electric Buses with VAT covered by the government amounting to 5% of the selling price, two tax invoices must be issued:

• A tax invoice with transaction code 01 for 6/11 of the selling price that does not receive the VAT covered by the government facility.
• A tax invoice with transaction code 07 for 5/11 of the selling price that receives the VAT covered by the government facility with the statement “VAT Covered by the Government According to PMK Number 8 of 2024.”

When the delivery of Certain Four-Wheeled Battery Electric Vehicles and Certain Battery Electric Buses with VAT covered by the government is made to:

1. Government VAT Collectors, transaction code 01 is replaced with 02;
2. Non-Government VAT Collectors, transaction code 01 is replaced with transaction code 03; and
3. Deliveries using other value bases, transaction code 01 is replaced with transaction code 04.

The realization report of VAT covered by the government, which must be prepared by PKPs delivering Certain Four-Wheeled Battery Electric Vehicles and Certain Battery Electric Buses, must be in the form of a tax invoice with code 07 reported in the VAT Periodic Tax Return for the relevant tax period.

Reporting and correcting the VAT Periodic Tax Return for the delivery of Certain Four-Wheeled Battery Electric Vehicles and Certain Battery Electric Buses for the January 2024 to December 2024 tax periods can be treated as a realization report as long as it is submitted by January 31, 2025.

Buyers who are PKPs and utilize the VAT covered by the government facility when purchasing Certain Four-Wheeled Battery Electric Vehicles and Certain Battery Electric Buses cannot credit the value of VAT covered by the government when reporting the VAT Periodic Tax Return. PKPs delivering Certain Four-Wheeled Battery Electric Vehicles and Certain Battery Electric Buses may be eligible for a preliminary refund of overpaid taxes as low-risk PKPs as stipulated in Article 9 Paragraph (4c) of the VAT Law.

Minister of Finance Regulation Number 9 of 2024:

• The government provides fiscal incentives in the form of Luxury Goods Sales Tax (PPnBM) covered by the government for the 2024 fiscal year to Taxable Entrepreneurs (PKPs) who: 

1. Import Completely Built Up (CBU) Four-Wheeled Battery Electric Vehicles; and
2. Deliver Certain Four-Wheeled Battery Electric Vehicles produced from Completely Knocked Down (CKD) Four-Wheeled Battery Electric Vehicles.

• The PPnBM covered by the government is provided at 100% of the PPnBM due for the January 2024 to December 2024 tax periods, which can be evidenced by:

1. The date of registration of import notification documents for the import of CBU Four-Wheeled Battery Electric Vehicles.
2. The date of the tax invoice for the delivery of Certain Four-Wheeled Battery Electric Vehicles. 

PKPs importing certain CBU Four-Wheeled Battery Electric Vehicles must prepare import notification documents containing information on the approval letter number and date for the use of import incentives, import facility codes, brand, type, and variant, chassis number, and Harmonized System (HS) code.

3. The realization report of PPnBM covered by the government in the form of import notification documents reported in the VAT periodic tax return.

• The PPnBM on the delivery of imported CBU Four-Wheeled Battery Electric Vehicles and Certain Four-Wheeled Battery Electric Vehicles becomes due and is not covered by the government if in their delivery:

1. A tax invoice is not used.
2. The realization is not reported.