automotive

The Gaikindo Association Assesses The Automotive Industry's Adaptability To Policy Changes

The Chairman of the Indonesian Automotive Industry Association (Gaikindo), Jongkie Sugiarto, expressed that his organization is not overly concerned about the impact of the 12 percent Value Added Tax (VAT) on automotive products. 

He stated that there is no objection to the 12 percent VAT policy for vehicles, as the automotive industry has become accustomed to facing such regulations annually. 

Jongkie elaborated that the domestic automotive sector continues to operate within its framework, as similar tax increases have frequently occurred, thus not warranting significant concern. "Historically, VAT increases have been observed, starting from 10 percent, then 11 percent, and now reaching 12 percent," Jongkie Sugiarto remarked on Monday (January 6), as reported by Antara. 

In relation to efforts to boost the growth of the automotive industry, the government is providing incentives, including the continuation of incentives for electric vehicles in the form of government-subsidized VAT, which will be set at 10 percent in 2025. 

"For electric vehicles, the standard VAT rate is 12% of the selling price. The government will cover 10% of the selling price, leaving consumers to pay only 2% of the selling price," stated Rustam Effendi, a Senior Policy Analyst at the Fiscal Policy Agency of the Ministry of Finance. 

Additionally, there are incentives for hybrid vehicles in the form of a 3 percent luxury goods sales tax discount covered by the government. 

"The payable luxury goods sales tax is 6% of the selling price, derived from a maximum rate of 15% multiplied by a tax base of 40% of the selling price. The payable tax, according to Article 26 of Government Regulation No. 74 of 2021, is calculated as 6% of the selling price, minus the government-subsidized luxury goods sales tax of 3% of the selling price. After deducting the 3% subsidy, the remaining luxury goods sales tax that manufacturers must collect is only 3% of the selling price," Rustam explained. 

Tag: Automotive Gaikindo Jongkie Sugiarto