In February, Indonesia announced that it would provide a temporary tax break for some cars to boost sales and assist its auto industry, which had been affected by the Covid-19 pandemic. The government said that from March to May, it would abolish the luxury tax for sales of sedans and two-wheel drive cars with engine capacities below 1,500 cc. The move would remove taxes of between 10% to 30% for these cars.
Now, the country’s finance ministry says it is expanding the scope of those tax breaks to include more types of vehicles in a bid to accelerate economic recovery and aid the manufacturing industry, Reuters reports. Four-wheel drive models and cars of up to 2,500 cc engine displacement that are manufactured with at least 60% domestically-sourced components will now be included under the scheme.
The ministry said that the tax incentive for the new range of vehicles will come in the form of luxury tax discounts ranging from 12.5% to 50%. The tax breaks are effective from April until the end of the year, although the maximum 50% discount will only be given from April to August, and will be halved to 25% from September to December.
Models to benefit from the expanded tax exemption include the Toyota Fortuner and Innova as well as the Honda CR-V and HR-V. In the case of the CR-V, prices are set to go down by as much as RM10,400 as a result of the tax breaks. The CR-V 2.0 CVT, which is currently priced at 487.2 million rupiah (RM138,840), will go for 458.8 million rupiah (RM130,750) during the first phase of the tax break period.
As for the CR-V 1.5L Turbo, the 519.8 million rupiah (RM148,150) selling price will be adjusted to 487.3 million rupiah (RM138,870). Meanwhile, the CR-V 1.5L Turbo Prestige will gain the most, its price dropping by 36.5 million (RM10,400) from 573.1 million rupiah (RM163,320) to 536.6 million rupiah (RM152,920). Meanwhile, HR-V prices will go down by up to 25 million rupiah (RM7,125).
Not every vehicle will get to benefit from the scheme. The Mitsubishi Pajero Sport is one of those, because its percentage of locally-sourced components hasn’t achieved the 60% needed to meet the criteria.
The ministry says the expansion in vehicle tax breaks is looking to get the upper middle class – which has so far held back from big purchases during the pandemic and have preferred to increase their savings – to spend on cars. “The government sees that the stimulus for the middle class has big potential to boost consumption,” it said in a statement.
Auto sales in ASEAN’s most populous country and largest economy has recovered after a sharp drop at the start of the pandemic, but have yet to return to pre-Covid levels. Indonesia’s auto sales in 2020 was just over 532,000 units, around half of the 2019 total.
Looking to sell your car? Sell it with Carro.
Our PM visit to indonesia showing great instant results, SST reduced too. Tengkiu gomen perihatin
And many FDI from Malaysia instantly outflow to Indonesia to. Tengkiu gomen perihatin.
Mr RIP…are you the undertaker?Dont bodek just for the sake of getting influenced,and syiok sendiri.
Instant results?…hello ,Rm20 Billion of Hyundai,Toyota car/battery mega projects went into the MOU with Jokowi and Co.
You are still using manual typewriter when Elon Musk is selling electric cars,dude.
Buy new car. but Indons still cannot drive back to kampung for ramadhan & Aidilfitri …. becos larangan rentas negeri…
Mesia tax break benefits everyone from B40 to T20. Indon tax break only benefits the luxury car. Well done Jokowi and Co. In the end we know who he serves.
You do realize this mega projects was due to Indonesia having lithium right? Not to mention cheap labor and such. You want Malaysia to be a place companies come to in order to exploit your labor and pay you dirt?
Woohoo… Ours will be extended to end of the year too!
How about Rm7000 tax break for Myvi,Ativa?
RM8K for X50
Rm10K for X70,and those cars above rm100K ?
For once in its reign,can PN bring some positive news to rakyat,instead of all the negative news?
https://paultan.org/2021/03/25/malaysian-vehicle-sales-data-for-feb-2021-by-brand-proton-up-by-96-honda-rebounds-with-a-201-jump/
Confidence berlimpah in how the country being run now.
Proton and Perodua are already given free market share due to protectionist policies pricing out quality foreign cars – you want to help them out some more?
Words in the street indicates that our PM will soon lower the car prices to stimulate economy.
Get ready to buy cheap cars in Malaysia, guys. Balik kampung and Beraya will be gaya and sweet.
For Malaysia to move up and forward … We need to let the new order to take charge.. Jacinda Ardern & Sanna Marin have shown the way to do it. Together we can
Give 0% excise and import tax. Why in the world is a basic Toyota Camry considered upper middle class car?!
Toyota Camry for RM100K will destroy competition
Mazda CX-30 for RM90K starting price? Sign me up!
Stop giving free market share to P1 and P2 tin kosong/rebadge
I hope the government will consider extending this zero SST until the economy is better and Covid is no longer a threat to this country.
I believe it will help the rakyat. And it will help the government with a better economy. Zero SST doesn’t mean Zero tax for government. Car company still pay business profit tax to the government.
Come on PN, you can do it. At least do it for rakyat.
There is never a better time to buy car than now, so why ask to extend. Dun wait, BUY NOW! NOW!!!!
The fact that there is a luxury tax in the first place is crazy. If it was like Rolls Royce then it is *somewhat acceptable* but 2.5 engine is considered luxury? I mean, how sad is your country when a something as basic as a Honda CRV is considered a luxury.
At least Indonesia shows that it wants to remove such taxes albeit temporarily instead of keeping them. One bad thing of new taxes being implement is that governments have little incentive to remove them
The term “luxury tax” is an olden term conceived during the new order era, specifically in 1983 when cars were seen as luxury items (luxury items were defined as 1. Items that are not essential. 2. Goods consumed to indicate status. 3. Goods consumed by certain people. 4. Goods generally consumed by high-income people.). This surely is no longer the case especially in these past two decades as more Indonesians made it into the middle class and cars are becoming more and more affordable to more people.
This obsolete luxury tax regime is based on engine-displacement and also drive train (2WD, 4WD, or AWD). It is due to end later this year on October 16th, 2021. From there on out, cars will no longer be taxed as luxury items, but will be taxed according to their rated emission. Fully electric BEV (as well as hydrogen fuel cell if I’m not mistaken) with zero local emission will enjoy 0% tax, 5% for PHEV, and somewhere around 6-8% for hybrid depending on its rated emission, 8-12% for mild hybrid, again, depending on its rated emission, and even higher for conventional power train such as pure petrol or diesel, also emission-dependant.
This would be significantly lower if compared to the current tax regime, where it can go as high as 40% for 4WD cars, not factoring in import duties if its not locally assembled.