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inance Minister Sri Mulyani Indrawati has issued a regulation providing more value-added tax (VAT) discounts for purchasers of electric cars and buses in 2024.

Finance Ministerial Regulation No. 8/2024 specifies government-borne VAT on specific electric vehicles (EVs) and battery-powered buses.

Under this new scheme, the government will bear 10 percent of the specified vehicles’ VAT, reducing the buyer’s payments to just 1 percent of the car’s selling price.

The VAT cut will be provided for the tax period from January to December, as stipulated by Article 5, Clause 1 of the regulation.

However, to qualify for this discount, electric cars and buses must meet certain conditions, such as reaching a minimum local content level (TKDN) requirement.

Four-wheeled, battery-based EVs and buses must have a minimum TKDN value of 40 percent to qualify for a 10 percent VAT discount.

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Electric buses with a TKDN value between 20 and 40 percent, however, will only be eligible for a 5 percent VAT discount.

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