Home Affairs Minister Tito Karnavian has released a circular recommending local governments to relax local taxes related to motor vehicles. The policy recommendations are outlined in the Minister of Home Affairs Circular No. 973/2894/SJ concerning Motor Vehicle Tax and Transfer Motor Vehicle Title Fees Reduction Incentives (SE Mendagri-973/2894/SJ).
The regulation has been released to support the government’s efforts to maintain a conducive business climate in the motor vehicle industry sector which has been affected by the Corona Virus Disease 2019 (Covid-19) pandemic. Through this circular, the Minister of Home Affairs conveys three policy recommendations pertaining to the provision of regional tax incentives for motor vehicles.
First, the governor may stipulate a reduction of Motor Vehicle Tax (Pajak Kendaraan Bermotor/PKB) and Transfer of Motor Vehicle Title Fee (Bea Balik Nama Kendaraan Bermotor/BBNKB) for motor vehicles listed in the Minister of Industry Decree No. 169 of 2021 concerning Motor Vehicles with Sales tax on Luxury Goods on Supply of Taxable Goods Classified as Luxurious Borne by the Government in Fiscal Year 2021 (Kepmenperin-169/2021).
Second, the governor stipulates the imposition of PKB and BBNKB for Battery-Based Electric Motor Vehicles (Kendaraan Bermotor Listrik Berbasis Baterai/KBLBB) for people or goods, public transportation for people, and public transportation for goods at a maximum of 10% of the tax base of PKB and BBNKB as per statutory provisions.
Third, the governor/regent/mayor provides incentives of exemptions and/or reduction of parking taxes and/or fees, provides incentives of exemptions from motor vehicle testing fees, and exempts the implementation of odd-even policy, and facilitates the construction of operational support facilities as per their respective authority for KBLBB.