To accelerate the transition from the use of fossil energy to electrical energy and to increase the public’s interest in purchasing battery-based electric motorized vehicles, the Ministry of Finance (“MoF”) has issued regulation No. 38 of 2023 (“PMK-38”) concerning VAT borne by the Government on the Delivery of Certain Four-Wheeled Battery Electric Vehicles and Certain Bus Battery Electric Vehicles.

Certain four-wheel battery-powered electric motorized vehicles and certain bus battery-powered electric motorized vehicles must comply with the domestic component level value criterion with minimum domestic components between 20% and 40%.

The VAT borne by the government is available until December 2023 for the following conditions:

• The 10% VAT borne by the government on the delivery of four-wheel battery-powered electric motorized vehicles and certain buses that meet a minimum of 40% domestic component; and
• The 5% VAT borne by the government on the delivery of certain buses that meet a minimum of 20% up to 40% domestic component.

Buyers who enjoy the facility of VAT borne by the government cannot treat this VAT as creditable input VAT.

The taxpayers who obtain the facility are required to prepare a realization report of VAT borne by the government and issue the Tax Invoices for this facility separately from the Tax Invoices for the delivery of other non-facility products. The reporting of Monthly VAT Returns for the delivery of four-wheel battery-based electric motorized vehicles and certain battery-based bus vehicles from April to December 2023 can be treated as a realization report if submitted no later than January 31, 2024.

This regulation became effective on April 1, 2023.