Indonesia cuts tax for all cars between March until May

The Indonesian government will remove the luxury tax imposed on cars below 1,500cc from March 2021 to May 2021. Reuters reports that the tax removal is to bolster the Indonesian automotive industry.

Currently only LCGC (Low-Cost Green Cars) are exempted from the luxury tax. LCGC in Indonesia includes locally produced (CKD) hatchbacks, MPVs, and cars below 1,200 cc. The current luxury tax for sedans and other car below 1,500 cc is between 10% and 30%.

The tax exemption for cars below 1,500 cc will only last for three months. The following three months (June – August) will see a 50% luxury tax discount, and the subsequent three months (September-November) will see a 25% luxury tax discount.

The automotive industry in Indonesia has taken a hit due to the COVID-19 pandemic and sales have been halved from the previous year.

Closer to home, the Malaysian government has extended the SST exemption period to June 2021 to boost the Malaysian automotive industry.