Summary
Indonesia is preparing a fresh tax incentive for battery electric vehicles (BEVs) targeted to take effect in June 2026. The main form is Value Added Tax Borne by the Government (PPN DTP) for electric cars, plus a purchase subsidy for electric motorcycles. The incentive continues the framework previously set out in Minister of Finance Regulation (PMK) Number 12 of 2025, after the prior scheme expired at the end of 2025.
What the Government Is Preparing
The Minister of Finance has targeted the electric car and motorcycle incentive to begin in June 2026. For electric cars, the incentive takes the form of PPN DTP: the VAT that would otherwise be charged on the sale of the vehicle is instead borne by the government, lowering the price the consumer pays.
The VAT-borne rate is differentiated by battery type. Electric cars using nickel or nickel manganese cobalt (NMC) batteries are planned to receive 100 percent government-borne VAT. Electric cars using non-nickel batteries are planned to receive 40 percent. The distinction aims to promote nickel as a flagship commodity and strengthen the national battery industry downstream.
For electric motorcycles, the government is preparing a purchase subsidy of Rp5 million per unit. The motorcycle subsidy differs in nature from the car PPN DTP: it is a direct price cut, not a tax facility.
Local Content and Quota Requirements
Drawing on the framework of PMK Number 12 of 2025, the EV PPN DTP incentive requires vehicles to be produced domestically with a Local Content Level (TKDN) of at least 40 percent. This requirement is a key dividing line: completely built up (CBU) imported electric cars do not receive the same PPN DTP facility.
The government is preparing a quota of roughly 100,000 electric cars and 100,000 electric motorcycles for the year. A quota means the facility is limited and likely allocated on a first-come basis, so buying earlier improves the chance of securing the incentive.
Legal Basis and Important Caveats
Indonesia's EV PPN DTP framework rests on Law Number 8 of 1983 on VAT and Sales Tax on Luxury Goods and its amendments, including Law Number 7 of 2021 (the HPP Law), which provides the basis for VAT facilities. The technical mechanism for EV PPN DTP in prior years was set in PMK Number 12 of 2025, in the articles governing rates and supply conditions.
As of mid-June 2026, the specific Minister of Finance regulation setting the 2026 rates and procedures has not been officially issued. The figures of 100 percent, 40 percent, the 100,000-unit quota, and the Rp5 million subsidy are government plans, not final provisions in an enacted article. Businesses and prospective buyers should wait for the official PMK before pricing vehicles or planning purchases, as technical details may change when the regulation is issued.
Note also that since 11 May 2026, the announcement of central tax policy is the authority of the Minister of Finance. This means the official confirmation of the EV incentive will come through the Ministry of Finance channel rather than a separate technical announcement.
What It Means for Buyers and Businesses
For buyers, 100 percent government-borne VAT on NMC electric cars means the VAT component no longer adds to the price, narrowing the gap against conventional cars. For dealers and brand agents, the 40 percent TKDN requirement determines which models qualify, so verifying each model's TKDN status before advertising an incentive claim is essential.
To understand the core concepts in this update, see the Tax Glossary entries for TKDN and DTP, and the related Tax Guide on EV government-borne VAT for the detailed requirements and how to use it.