Indonesia has scrapped its nationwide tax incentives for electric vehicles (EVs), handing authority over rates to regional governments in a policy shift that could reshape the country’s automotive market and slow momentum in some areas.
The move, formalised on 17 April, introduces a new framework for vehicle taxation, including battery-based EVs, and ends a previous scheme that effectively set taxes at zero nationwide, local daily Kompas reported.
Under the new system, EVs are subject to Motor Vehicle Tax (PKB) and Vehicle Title Transfer Fee (BBNKB), although provincial governments now have full discretion to set rates — including maintaining reduced levels or retaining a zero per cent tax through local regulations, it added.
The change marks a shift from centralised incentives to a decentralised approach, with local authorities balancing revenue needs against efforts to promote cleaner transport. Tax levels are expected to vary across Indonesia’s regions, potentially creating uneven market conditions.
The central government has yet to publish detailed calculation mechanisms, leaving implementation largely in the hands of provincial administrations.
The Institute for Essential Services Reform (IESR), a Jakarta-based energy think-tank, called the policy a “regulatory regression” that could weaken investor confidence in Indonesia’s EV sector.
“Regulatory stability is the backbone of the energy transition,” said Fabby Tumiwa, IESR’s executive director, warning that frequent policy changes risk undermining both consumer demand and investment.
IESR added the new rule could create legal uncertainty and disrupt Indonesia’s push to expand EV adoption, a key part of efforts to cut fuel imports and improve energy security.
Indonesia aims to produce 600,000 electric vehicles annually by 2030, supported by investment in battery manufacturing, charging infrastructure and financing, even as policymakers recalibrate incentives to balance fiscal and environmental goals.
The group urged the government to delay implementation and provide clearer, long-term policy support for the sector.
