The Ministry of Finance extends the application of Sales Tax on Luxury Goods (STLGs) (Pajak Penjualan atas Barang Mewah/STLGs) borne by the government (Ditanggung Pemerintah/DTP) incentives for certain motor vehicles. In addition, the Ministry of Finance has changed the amount of STLGs DTP incentives for certain motor vehicles.

The policy is outlined in the Minister of Finance Regulation No. 120/PMK.010/2021 concerning the Second Amendment to the Minister of Finance Regulation No. 31/PMK.010/2021 concerning Sales Tax on Luxury Goods on Supplies of Taxable Goods Classified as Luxury in the Form of Certain Motor Vehicles Borne by the Government for the 2021 Fiscal Year (MoF Reg. 120/2021).

The extension of STLGs DTP incentives and changes to the rates are carried out to maintain enthusiasm and sustain people’s purchasing power in the motor vehicle industry sector to encourage and accelerate national economic recovery.

This latest regulation revises MoF Reg. 77/2021. The Ministry of Finance had formerly extended the granting of STLGs DTP incentives for certain vehicles which originally ended in May 2021 to August 2021 through MoF Reg. 77/2021.

Next, through the issuance of MoF Reg. 120/2021, STLGs DTP incentives are granted for the September 2021 taxable period until the December 2021 taxable period. STLGs DTP incentives are extended for four types of motor vehicles as follows:

i.	sedans or station wagons with an ignition or compression ignition engine (diesel or semi-diesel) with a cylinder capacity of up to 1,500 cc;
ii.	passenger motor vehicles with an engine capacity of up to 1,500 cc;
iii.	4x2 passenger motor vehicles with an engine capacity of >1,500 cc up to 2,500 cc; and
iv.	4x4 passenger motor vehicle with an engine capacity of > 1,500 cc up to 2,500 cc.

In addition, there are three changes to the amount of STLGs DTP incentives for certain motor vehicles. First, the amount of STLGs DTP incentives has been changed from 25% to 100% for supplies of two types of motor vehicles. The two types of motor vehicles include sedans or station wagons with spark-ignition or compression ignition engines (diesel or semi-diesel) with an engine capacity of up to 1,500 cc and passenger motor vehicles with an engine capacity of up to 1,500 cc.

Second, for supplies of 4x2 passenger motor vehicles with an engine capacity of > 1,500 cc to 2,500 cc, the amount of STLGs DTP has been changed from 25% to 50%. Third, the amount of STLGs DTP has been changed from 12.5% to 25% for supplies of 4x4 passenger motor vehicles with an engine capacity of > 1,500 cc up to 2,500 cc.

On another note, STLGs DTP incentives for certain motor vehicles may be granted if the local purchase requirement is fulfilled. The said local purchase includes the fulfillment of the use of domestically produced components of a minimum of 60% in the production of certain motor vehicles.

Further, tax invoices that have been prepared for supplies of certain motor vehicles for the September 2021 taxable period with incentives based on the former regulations shall be replaced.

As per Article 11D paragraph (2) of MoF Reg. 120/2021, STLGs and/or VAT overpayment collected on supplies of motor vehicles eligible for STLGs DTP incentives shall be refunded by the Taxable Person for VAT Purposes (Pengusaha Kena Pajak/PKP) performing the collection. This ministerial regulation was enacted on 13 September 2021.

Changes and Extension of Sales Tax on Luxury Goods Borne by the Government Incentives