The government has officially expanded the scope of certain motor vehicles eligible for sales tax on luxury goods (STLGs) borne by the government (Ditanggung Pemerintah/DTP) incentives on motor vehicles with engine capacities above 1,500 cc.

The expansion of the scope of vehicles entitled to STLGs DTP incentives is outlined in the Minister of Finance Regulation No. 31/PMK.010/2021 concerning Sales Tax on Luxury Goods for Supplies of Taxable Goods Classified as Luxurious in the Form of Certain Motor Vehicles Borne by the Government for Fiscal Year 2021 (MoF Reg. 31/2021).

The government expands STLGs DTP incentives for certain motor vehicles because incentives previously provided through the Minister of Finance Regulation No. 20/PMK.010/2021 concerning Sales Tax on Luxury Goods for Supplies of Taxable Goods Classified as Luxurious in the Form of Certain Motor Vehicles Borne by the Government for Fiscal Year 2021 (MoF Reg. 20/2021) are considered insufficient to increase people’s purchasing power in the motor vehicle industry sector. As such, a substitution is called for.

Effective since 1 April 2021, the enactment of MoF Reg. 31/2020 simultaneously revokes MoF Reg. 20/2021. The expansion of vehicle coverage implies that currently, four types of motor vehicles are given the DTP STLGs incentives. First, sedans or station wagons with spark ignition or compression ignition engines (diesel or semi-diesel) with a cylinder capacity of up to 1,500 cc.

Second, motor vehicles for the transportation of fewer than 10 people, including drivers other than sedans or station wagons, with spark ignition or compression ignition engines (diesel or semi-diesel) with a single axle drive system (4x2) with a cylinder capacity of up to 1,500 cc. Similar to the former provisions, the STLGs DTP incentives for the two types of vehicles are given in three stages:

i.	100% of STLGs payable for the April 2021 Tax Period to the May 2021 Tax Period;
ii.	50% of STLGs payable for the June 2021 Tax Period to the August 2021 Tax Period; and
iii.	25% of STLGs payable for the September 2021 Tax Period to the December 2021 Tax Period.

Third, motor vehicles for the transportation of fewer than 10 people, including drivers other than sedans or station wagons, with spark ignition or compression ignition engines (diesel or semi-diesel) with a single axle drive system (4x2) with a cylinder capacity of more than 1,500 cc up to 2,500 cc. The STLGs DTP incentives for this type of vehicles are given in two stages.

i.	50% of STLGs payable for the April 2021 Tax Period to the August 2021 Tax Period; and
ii.	25% of STLGs payable for the September 2021 Tax Period to the December 2021 Tax Period.

Fourth, motor vehicles for the transportation of fewer than 10 people, including drivers other than sedans or station wagons, with spark ignition or compression ignition engines (diesel or semi-diesel) with a two-axle drive system (4x4) with a cylinder capacity of more than 1,500 cc up to 2,500 cc. The STLGs DTP incentives for this type of vehicles are also given in 2 stages.

i.	25% of STLGs payable for the April 2021 Tax Period to the August 2021 Tax Period; and
ii.	12.5% of STLGs payable for the September 2021 Tax Period to the December 2021 Tax Period.

In addition to extending the scope of vehicles eligible for the incentives, the government has also lowered the minimum local purchase amount. Currently, the total use of domestic components in certain motor vehicle production is a minimum of 60%. MoF Reg. 20/2021 formerly required a minimum local purchase amount of 70%.

Through MoF Reg. 31/2021, the Ministry of Finance also constrains the provisions on the submission of reports on the realization of STLGs DTP by Taxable Persons for VAT Purposes (Pengusaha Kena Pajak/PKP) that produce and supply certain motor vehicles.

PKP that produce and supply certain motor vehicles are currently required to submit reports on the realization of STLGs DTP which consist of two files. First, the Tax Invoice reported in the Periodic VAT Returns by the PKP supplying the motor vehicles.

The Tax Invoice is prepared by stating the transaction code 01, a description of the type of goods that at least contains information of the type, cylinder capacity, chassis number, engine number and Harmonized System code, and the statement “STLGs BORNE BY THE GOVERNMENT ...% AS PER MoF REG. NUMBER ... /PMK.010/2021 OF IDR ... “.

Failure to prepare and report tax invoices as per these provisions will result in STLGs for the supply of the vehicle not being borne by the government and the supply shall be subject to STLGs as per prevailing provisions.

Second, a detailed list of certain motor vehicles is submitted twice for each tax period. In further detail, supplies of motor vehicles entitled to STLGs incentives on the 1^st to the 15^th must be reported no later than three working days after the 15^th. Certain motor vehicles supplied on the 16^th until the end of the tax period, on the other hand, are to be reported no later than three working days after the tax period ends

The detailed list of certain motor vehicles in the STLGs DTP realization reports must be submitted through a special channel provided on the www.pajak.go.id webpage. However, if the special channel is not yet available, PKP must directly submit a detailed list of the supplies of certain motor vehicles in the form of electronic documents to the Tax Office (Kantor Pelayanan Pajak/KPP) where the PKP is registered.

The details of certain motor vehicles that satisfy the local purchase requirement and are entitled to the STLGs DTP incentives will be outlined in a minister of industry decree. In this regard, the Minister of Industry has issued the Minister of Industry Decree No. 839 of 2021 concerning Motor Vehicles with Sales Tax on Luxury Goods on Supplies of Taxable Goods that are Classified as Luxurious Borne by the Government in Fiscal Year 2021 (Kepmenperin 839/2021).

Through this decree, the Minister of Industry stipulates 29 car models eligible for the STLGs DTP incentives. This number increases compared to the former decree which stipulated 21 car models. Based on the appendix of the regulation, motor vehicles entitled to the STLGs DTP facilities include all model variants, ranging from Toyota Yaris, Toyota Vios, Toyota Sienta, Toyota Innova 2.0, Toyota Innova 2.4, Toyota Fortuner 2.4 4x2, Toyota Fortuner 2.4 4x4, Daihatsu Xenia, and Toyota Avanza, Daihatsu Grand Max, Daihatsu Luxio, Daihatsu Terios, Toyota Rush, to Toyota Raize.

There are also all variants of Daihatsu Rocky, Mitsubishi Xpander, Mitsubishi Xpander Cross, Nissan Livina, Honda Brio Rs, Honda Mobilio, Honda BR-V, Honda CRV 1.5T, Honda HR-V 1.5L, Honda HR-V 1.8L, Honda CRV 2.0 CVT, Honda City Hatchback, Suzuki New Ertiga, Suzuki XL 7, and Wuling Confero. The 29 vehicles listed in the appendix are manufactured by six companies, i.e. PT. Toyota Motor Manufacturing Indonesia, PT. Astra Daihatsu Motor, PT. Mitsubishi Motors Krama Yudha Indonesia, PT. Honda Prospect Motor, PT. Suzuki Motor Indonesia, and PT. SGMW Motor Indonesia.

As producers of the 29 cars entitled to STLGs DTP incentives, the six industrial companies are required to submit a local purchase plan in 2021 and submit a letter of the utilization of local purchase in production to the Director General of Metal, Machinery, Means of Transportation, and Electronics Industries (Industri Logam, Mesin, Alat Transportasi, dan Elektronik/ILMATE) of the Ministry of Industry. Moreover, these industrial companies are required to submit tax invoices, reports on the realization of STLGs DTP, and quarterly sales performance to the Director General of ILMATE of the Ministry of Industry.

Kepmenperin 839/2021 also mandates the Director General of ILMATE to supervise and evaluate the realization of the local purchase plan. The monitoring and evaluation may be carried out by involving an appointed independent verification agency.

In the event that the results of monitoring and evaluation indicate disparities in the implementation of the local purchase, the Director General of ILMATE is authorized to propose the imposition of administrative penalties and/or remove motor vehicles that do not meet the local purchase provisions from the list of vehicles eligible for the STLGs DTP incentives.

Kepmenperin 839/2021 comes into effect as of 1 April 2021 until the end of December 2021. With the enactment of the Minister of Industry Decree 839/2021, the Minister of Industry Decree No. 169/2020 concerning Motor Vehicles with Sales Tax on Luxury Goods Borne by the Government in Fiscal Year 2021 (Kepmenperin 169/2021) is declared revoked and invalid.

Expansion of the STLGs Incentive for Certain Motor Vehicles