Regulations on Import Duty Exemptions for Electric Vehicles

The provision of import duty exemptions for electric vehicles (EVs) until December 2025 is expected to bring multiple benefits, both in driving sustainable national economic growth and in supporting Indonesia’s efforts to reduce carbon emissions through EV adoption.

Motor vehicle imports play a crucial role in Indonesia’s international trade and are strictly regulated by the government. While Indonesia has established itself as a competitive automotive exporter in the global market, it still relies on imports to meet specific demands, particularly for luxury and specialized vehicles. Statistics show that in 2023, Indonesia imported approximately 75,000 cars, most of which were luxury vehicles. Additionally, premium motorcycle imports reached 25,000 units, including large motorcycles and electric vehicles (EVs).

The Ministry of Finance Regulation No. 202/PMK.04/2019 on the Release of Imported Goods for Use in the Form of Completely Built-Up Motor Vehicles (“PMK 202/2019”) governs the procedure for submitting customs notifications for vehicle imports. Article 2(1) of PMK 202/2019 states:

“The release of imported goods for use in the form of completely built-up motor vehicles from Customs Areas or other areas treated as Customs Areas shall be carried out by submitting an import customs notification.”

This customs notification must be submitted by the importer or an authorized party before or upon the goods’ arrival in Indonesia. The required information includes the type, quantity, and value of the imported goods, along with other relevant details. Furthermore, Article 2(3) of PMK 202/2019 stipulates that customs notifications apply to motor vehicles that:

Are subject to import duty and/or import-related taxes; or
Qualify for exemptions, reductions, or deferrals of import duty and/or tax exemptions related to importation.

The Indonesian government has granted exemptions, reductions, and deferrals of import duties for electric vehicle importers starting from February 15, 2024, which will remain in effect until December 2025. This incentive aligns with government policies aimed at fostering low-carbon emissions from EVs and hybrid vehicles.

Import Duty Exemption Regulations for Electric Vehicles

To support the government’s policy on accelerating EV adoption, fiscal incentives, including import duty and tax exemptions, are necessary.

Article 2(1) of the Ministry of Investment/Investment Coordinating Board Regulation No. 6 of 2023 on Guidelines and Governance for Granting Import Incentives and/or Delivery of Four-Wheeled Battery Electric Vehicles to Accelerate Investment (“Investment Regulation 6/2023”) stipulates that business entities may receive incentives for importing four-wheeled battery electric vehicles in the form of:

0% import duty rate; and
Government-borne Luxury Goods Sales Tax (PPnBM).

This incentive program opens opportunities for foreign manufacturers and increases the volume of EV imports to Indonesia. Notably, this policy has led to a 347% surge in electric vehicle imports. This initiative also aligns with the government’s strategy to support the transition to clean energy, in line with Indonesia’s commitment under the Paris Agreement to reduce carbon emissions and mitigate climate change impacts.

Procedure for Obtaining Import Duty Exemptions for Electric Vehicles

To qualify for the import duty exemption, importers must attach an incentive utilization approval letter issued by the Minister of Investment or the Head of BKPM (Investment Coordinating Board) within the import declaration document. Additionally, importers must include the facility code “87” for incentive utilization approval in the requirements fulfillment or import facility column, as stipulated in Article 4A(4) of the Ministry of Finance Regulation No. 10 of 2024 on Amendments to the Ministry of Finance Regulation No. 26/PMK.010/2022 on the Classification System and Import Duty Tariffs on Imported Goods (“PMK 10/2024”).

If the imported vehicle does not meet the requirements outlined in Article 4A(4) of PMK 10/2024, or if the imported goods do not match the submitted import data, the vehicle will be subject to the applicable general import duty rate.

Impact of the Electric Vehicle Incentive Policy

The import duty exemption policy for EVs has had a positive impact on Indonesia’s automotive market. Firstly, the policy has increased consumer interest in EVs. With the duty exemption, EV prices have become more competitive compared to conventional fossil-fuel vehicles, encouraging more consumers to switch to environmentally friendly EVs.

Additionally, this incentive policy contributes to achieving the government’s Net Zero Emission (NZE) target. With greater EV adoption, greenhouse gas emissions from the transportation sector are expected to decrease significantly. ***

Regulations on Import Duty Exemptions for Electric Vehicles

Import Duty Exemption Regulations for Electric Vehicles

Procedure for Obtaining Import Duty Exemptions for Electric Vehicles

Impact of the Electric Vehicle Incentive Policy

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