VAT incentive for battery based electric vehicles

The Minister of Finance has issued Regulation No. 38 of 2023 (“PMK-38”) which provides VAT incentives for battery-based electric vehicles. Under PMK-38, a portion of the VAT due on the sale of specified four-wheeled vehicles and buses will be borne by the government. The period covered is from April to December 2023. Deliveries of battery-based electric vehicles can enjoy the incentive of VAT borne by the government provided that the battery-based electric vehicles are newly registered and meet the domestic content requirement.

VAT that has enjoyed the incentive must be repaid in the event that the battery-based electric vehicle sold does not meet the requirements.