The energy transition is a major trend on the international stage as climate change has become a major issue today. Therefore, all governments, including the Indonesian government, have started to formulate policies that accelerate the transition to more options of renewable energy. Furthermore, this article will focus on one of the policies adopted by the Indonesian government to accelerate the energy transition in the country.
In the spirit of accelerating the energy transition and increasing public interest in Battery-Based Electric Motorized Vehicles (BB-EVs), the Indonesian government through the Ministry of Finance issued Minister of Finance Regulation number 38 of 2023 concerning Value Added Tax (PPN) on the Delivery of Certain Four-Wheeled Battery-Powered Electric Motorized Vehicles and Certain Battery-Powered EV Buses borne by the Government for the 2023 Fiscal Year (MoF Regulation 38/2023).
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Essentially, MoF regulation 38/2023 regulates the VAT payable on the delivery of certain types of four-wheeled BB-EVs and/or certain EV Buses to buyers and the general public, which will be paid by the government during the 2023 fiscal year. However, the eligible BB-EVs must also meet certain criteria regarding the local content (TKDN) aspect, as regulated in this new regulation.
Further, BB-EVs and Buses to be eligible to receive the VAT incentives of 10% and 5% must contain a minimum of 20% and 40% TKDN, depending on the type of vehicle. Apart from the vehicle requirements, there are also documents required for the delivery of BB-EVs and Buses by taxable entrepreneurs (PKP) i.e., tax invoice documents and also VAT realization reports in the form of tax invoices which are reported under period notification letters. However, VAT will not be borne by the government if the delivery is not covered in the tax invoice, or if the taxable business entity fail to submit the relevant realization report.
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In the end, the buyer, who is also a taxable entrepreneur and uses government-borne VAT, when they get BB-EVs and Buses, cannot credit the government-borne VAT as part of the calculation of the VAT payable through tax returns.
In conclusion, the Government through the Ministry of Finance has issued regulations in an effort to expedite the energy transition by paying VAT for BB-EVs and/or Buses to increase the public interest to switch to electric vehicles at this time. However, the VAT incentives borne by the government do not apply to all electric vehicles, but only for battery-based electric vehicles, and further there are other supporting requirements in order to get the VAT incentives.
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