Jakarta –
Minister of Industry Agus Gumiwang Kartasasmita proposed a revised Sales Tax on Luxury Goods (PPnBM) for cars. Later, zero percent PPnBM can be applied permanently for cars that are categorized as ‘People’s Cars’.
Minister of Industry Agus explained that the definition of a people’s car was proposed with conditions. So that manufacturers who produce them no longer get the luxury goods label.
“How can we define what is called a luxury item so that it must be taxed,” Agus said at a press conference on the 2021 Industrial Sector Performance & Outlook 2022, Wednesday (29/12/2021).
Agus explained that the Ministry of Industry will redefine what is called a people’s car. If there is a definition of the people’s car, then it is no longer a luxury item that is subject to PPnBM.
But there are conditions that must be met by the manufacturer, including engine capacity, price, and also the level of local content in the country (TKDN).
First about the price, of course, people’s cars must have a cheap price tag.
“In the eyes of the Ministry of Industry, the price of a car of Rp. 240 million is already a people’s car. So in our eyes it can no longer be called a luxury item,” said Agus.
Then the second criterion is a car with a maximum provision of 1,500 cc engine. Then the third is a car with local content (local purchase) 80%. According to him, with that much local content, it can be called a car made in Indonesia.
His party has also proposed to the Minister of Finance that cars that meet the three criteria above are not categorized as luxury goods.
“Well, we ask that it be categorized no longer as a luxury item. Thus there is no longer a PPnBM regime that applies to people’s cars. I have sent a letter to the Minister of Finance. We will see now what the response from the Minister of Finance is, please ask directly to the Minister of Finance,” added Agus.
For information, the Minister of Industry, Agus Gumiwang Kartasasmita, also proposed that the relaxation of the Sales Tax on Government-Born Luxury Goods (PPnBM) or a 100 percent discount on PPnBM would be made permanent. However, not all cars sold in Indonesia can be caught by this policy.
The condition is, permanently 0% PPnBM for automotive products with local purchases or local components that must be met for a car product at least 80%.
When compared, people’s cars have conditions such as the LCGC program which was launched since 2013. As is known, a row of Japanese brand cars produced in Indonesia has up to 90 percent local content.
But in the new regulation, PPnBM will be imposed. This is regulated in Government Regulation No. 73 of 2019 and Government Regulation No. 74 Year 2021.
The regulation states that LCGC is subject to PPnBM at a rate of 15% with a Tax Imposition Basis (DPP) of 20% of the selling price of motorized vehicles. In short, LCGC will be subject to PPnBM at 3%.
Watch Videos “Note! This is a list of 11 cars that can be permanently free of PPnBM“
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