Sales Tax on Luxury Goods for Vehicles

The Indonesian government encourages the shift from the use of fuel-oil vehicles to electric vehicles. This policy was triggered by the high level of air pollution by motor vehicles. The result of a study by the Ministry of Transportation in 2020 shows that 60% of air pollution is contributed by vehicles on the highway. This figure is ever increasing along with the growth of the number of vehicles.

Additionally, based on a study conducted by the Ministry of Public Works, the growth rate of vehicles on the highway is around 15% per year. Hence, the increasing number of motorized vehicles on the road predicted has potential to increase the level of air pollution. One of the incentives provided by the government to switch fuel-oil vehicles to electric vehicles is tax incentives.