Summary
Government-borne VAT (PPN DTP) for electric vehicles is a facility where the Value Added Tax that would normally be charged on an electric car purchase still applies, but the government pays it. As a result, the consumer pays a lower price because the VAT component no longer adds to the sale price. For 2026, the government targets the incentive to begin in June, with two rate schemes based on battery type, plus a separate subsidy for electric motorcycles.
What EV Government-Borne VAT Is
PPN DTP is a form of tax incentive. VAT remains payable on the supply of the vehicle, but the state bears the payment. This differs from a VAT exemption: under the DTP scheme, the tax is still recorded and reported, only the payment burden shifts to the government. For electric vehicles, the facility aims to lower the effective price of electric cars so they compete better with combustion vehicles, while encouraging adoption of low-emission vehicles and downstream battery production.
For electric motorcycles, the incentive takes a different form. The government is preparing a purchase subsidy, a direct price cut, not a VAT facility. So the term "PPN DTP" technically applies to electric cars, while electric motorcycles receive a subsidy.
Legal Basis
VAT facilities, including PPN DTP, rest on the following:
- Law Number 8 of 1983 on VAT and Sales Tax on Luxury Goods, as last amended by Law Number 7 of 2021 (the HPP Law), Article 16B, which provides the basis for VAT-not-collected or government-borne facilities for specific purposes.
- PMK Number 12 of 2025, the technical framework for EV PPN DTP in the prior period, which sets the facility rates and supply conditions, including the Local Content Level (TKDN) requirement.
Important note: as of mid-June 2026, the specific regulation setting the 2026 rates and procedures has not been officially issued. The figures and quotas in this guide are government plans, not final provisions in an enacted article. Always refer to the official regulation when issued before pricing vehicles.
2026 Rate Schemes
The EV PPN DTP rate is planned to differ by battery type:
| Vehicle type | Battery | Planned facility |
|---|---|---|
| Electric car (BEV) | Nickel / NMC | 100 percent government-borne VAT |
| Electric car (BEV) | Non-nickel | 40 percent government-borne VAT |
| Electric motorcycle | : | Rp5 million subsidy per unit |
Cars with nickel or nickel manganese cobalt (NMC) batteries receive the full facility because the government wants to promote nickel as a flagship commodity and strengthen the domestic battery industry.
TKDN Requirement and Quota
The key requirement is a minimum Local Content Level (TKDN) of 40 percent. The vehicle must be produced domestically with sufficient local content. As a result, fully imported (CBU) electric cars do not receive the same PPN DTP facility.
The government is also preparing a quota: roughly 100,000 electric cars and 100,000 electric motorcycles for the year. Because the quota is limited, the facility is likely allocated on a first-come basis, so buying earlier improves the chance of securing the incentive.
How to Use It
Practical steps for prospective buyers:
- Confirm the target model is a battery electric vehicle (BEV), not a hybrid, unless the official rule covers hybrids.
- Check the model's TKDN status with the dealer or brand agent. Only models with at least 40 percent TKDN qualify.
- For cars, ask the battery type (nickel/NMC or not), as it determines the 100 percent or 40 percent rate.
- Confirm quota availability at the dealer, since the facility is limited.
- Ensure the invoice and purchase documents record the PPN DTP facility in line with the regulation in force at the time of the transaction.
The PPN DTP facility is generally applied directly to the price at the point of sale, so buyers do not file a separate claim. The dealer processes the PPN DTP recording in the tax invoice.
Worked Example
Suppose an NMC electric car has a pre-VAT price of Rp500 million, with a 12 percent VAT rate. The VAT due is Rp60 million. If the 100 percent PPN DTP facility applies, that Rp60 million is borne by the government, so the buyer pays Rp500 million with no added VAT.
For a non-nickel electric car at the same price and rate, the 40 percent facility means the government bears 40 percent of Rp60 million, that is Rp24 million. The buyer bears the remaining Rp36 million, for a total of Rp536 million. These figures are illustrative: the final rates follow the official regulation.