Indonesia plans differential tax system to promote EVs & cut fuel imports

KATHMANDU: Indonesia is preparing to introduce a differentiated tax structure for petrol-powered and electric vehicles as part of its strategy to promote clean energy and reduce dependence on imported fuel, according to the government.

Minister of Energy and Mineral Resources Bahlil Lahadalia said the country will in the future apply a more favorable tax regime for electric vehicles (EVs) compared to gasoline-powered vehicles.

Speaking at an event in Jakarta, the minister emphasized that electric vehicles are more affordable in the long run and environmentally friendly, while also helping to reduce the nation’s fuel import requirements.

He added that wider adoption of EVs would ease the government’s energy subsidy burden, lower consumer costs, and strengthen national energy security.

According to local media reports, Indonesia aims to accelerate its transition toward cleaner transportation as part of its broader energy sustainability goals.

Following the expiration of previous nationwide tax incentives, Indonesia began imposing annual taxes on battery-powered cars and motorcycles from April. Under the new framework, regional governments will now have the authority to set specific tax rates for EVs and introduce incentive programs to encourage adoption.

Minister Lahadalia also noted that countries around the world are exploring their own policy models to ensure long-term energy sustainability and reduce reliance on fossil fuels.