Govt to Apply Luxury Goods Tax for Low-Cost Green Car

TEMPO.CO, Jakarta - The Indonesian government planned to apply luxury goods tax or PPnBM for the low-cost green car (LGCC). The plan was noted in the revised draft of PPnBM scheme during a consultation meeting with the House of Representatives (DPR)'s Commission XI overseeing financial affairs on Monday, March 11.

“If the LGCC still adopts the Euro 2 emission standard, the tax will amount to 3 percent,” said the Industry Minister Airlangga Hartarto Monday in the Parliament Complex, Jakarta.

The tax, however, would be dropped should LGCC producers lower the emission quality. According to Airlangga, the plan was aimed at encouraging industrial business to develop the eco-friendly machine.

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“The tax for the electric car is zero, while for the gas-fueled car is two percent,” he added.

The government is currently drafting a new scheme of luxury goods tax for four-wheeled vehicles in which stipulates that the lower the emission standard, the lower the tax rate, in a bid to meet the target of 20 percent electric cars in the country by 2025.

According to Airlangga, several countries provided a subsidy for electrical-fueled cars, but he did not want Indonesia to follow the action. “We do not want the fuel subsidy is replaced with vehicle subsidy, so we take the financial incentive to support this industry development.”

Finance Minister Sri Mulyani said that the latest draft of luxury goods tax would be issued in a Government Decree this year and take effect in 2021.

CAESAR AKBAR