Minister of Industry Proposes for Cars Worth Under Rp 250 Million to be Tax Free

JAKARTADAILY.ID – Indonesian Minister of Industry Agus Gumiwang Kartasasmita proposed that in 2022, four-wheeled motorized vehicles with a selling price of under IDR 250 million get an exemption from the Sales Tax on Luxury Goods (PPnBM), his reason being that cars in this price segment have become a public need.

According to Agus, controlling four-wheeled motorized vehicles with a capacity of under 1,500 ccs and with a sales price of under IDR 250 million is about 60 percent of the market segment.

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"This data shows that this type of vehicle dominates the domestic car market, and is in accordance with people's purchasing power. So, we think that cars with prices below IDR 250 million are no longer luxury goods, but have become part of the needs of the community," Agus explained in a press release from the Ministry of Industry quoted on Thursday.

With these considerations, Agus proposes that cars with sales prices below IDR 250 million and local purchases of at least 80 percent are not subject to PPnBM starting in 2022.

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"In our opinion, this can maintain the continuity of the automotive industry in 2022 and beyond. The PPnBM DTP (PPnBM borne by the government) stimulus policy has proven to be able to maintain the growth momentum of the automotive industry in the country while increasing the utilization and performance of the automotive component industry sector," said Agus.

The high level of local content also shows that the production of these cars also supports the growth of the component industry in the country. There are currently around 550 Tier 1 component industrial companies and 1,000 Tier 2 and 3 component industrial companies.

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"In addition, with a high level of local content, the car industry in the country has the opportunity to become a vehicle export base, especially for developing countries," concluded Agus. (*)