Discover the Ins and Outs of Luxury Car Taxes in Indonesia Before You Make a Purchase!

In Indonesia, motor vehicles, whether they have two or four wheels, fall under the category of luxury goods. So, it's no surprise that there are specific regulations governing luxury car taxes outlined in Law No. 28 of 2009 concerning Regional Taxes and Regional Retributions. 

 

These taxes are managed by local governments according to the prevailing regulations and laws. To get a handle on luxury car taxes, here's a brief rundown you should wrap your head around.

 

Why Should You Bother with Luxury Car Taxes?

 

Understanding why luxury cars are subjected to special taxes compared to regular cars is key. It boils down to the fact that luxury cars come packed with advanced features and technology, making them pricier than your average vehicle. 

 

Moreover, paying taxes on luxury cars serves as a form of civic contribution towards regional development for Indonesian citizens. The revenue from these taxes is earmarked for improving public services and financing public infrastructure projects.

 

Also read: The Requirements and List of Regions Hold Bleaching for Vehicle Tax Delinquents

 

How are Luxury Car Taxes Calculated? 

Before diving into the nitty-gritty of luxury car taxes in Indonesia, it's helpful to know what types of vehicles fall into the luxury category. Luxury cars typically boast engine capacities ranging from 3,000 to 5,000 cc and are seldom used for commercial purposes.

 

Luxury car owners are required to pay two types of taxes: the Motor Vehicle Ownership Transfer Fee (BBNKB/Bea Balik Nama Kendaraan Bermotor) and the Motor Vehicle Tax (PKB/Pajak Kendaraan Bermotor). BBNKB incurs a tax of 10% of the car's price, while PKB is set at a rate of 1.5% of the car's value. 

 

Additionally, taxpayers are obliged to pay the Compulsory Traffic Accident Fund Contribution (SWDKLL/Sumbangan Wajib Dana Kecelakaan Lalu Lintas), which amounts to IDR 140,000 and is paid concurrently with BBNKB and PKB taxes. 

 

Different Tax Rates for Conventional, Hybrid, and Electric Luxury Cars 

 

Luxury car taxes are based on the vehicle's price, meaning the higher the car's price tag, the higher the tax amount. But what about hybrid or electric luxury cars?

 

Similar to conventional luxury cars, hybrid vehicles equipped with electrified engines face relatively high tax rates. These rates are stipulated in Government Regulation (PP/Peraturan Pemerintah) No. 74 of 2021 and the Ministry of Home Affairs Regulation (Permendagri). 

 

Tax rates for luxury vehicles with hybrid or electric engines vary, ranging from 15%, 25% and 30%, depending on the cylinder capacity of each hybrid car. Despite these varying tax rates, the annual PKB rate remains consistent with conventional luxury cars. 

 

Government Incentives for Luxury Car Taxes 

 

Since 2022, the government has been offering incentives for Luxury Goods Sales Tax borne by the Government in the national automotive industry. This initiative aims to support the national automotive production sector, which took a hit post-Covid-19 pandemic. 

 

Thanks to these government incentives, there has been a noticeable uptick in the sales of four-wheeled motor vehicles domestically. This policy indirectly opens doors for local sectors to thrive and expand their businesses. 

 

Luxury car taxes may seem straightforward, but they play a significant role in the country's economy. By paying these taxes, taxpayers not only fulfill their responsibilities as vehicle owners but also as law-abiding Indonesian citizens.