Indonesia to give tax incentives for sales of some cars
12/02/2021 02:36
JAKARTA, Feb 12 (Reuters) - Indonesia will temporarily
remove a luxury tax on sales of some cars to bolster its
automotive industry, which has been badly hit by mobility
restrictions to contain the coronavirus epidemic, its economic
ministry said.
From March to May, the government will remove a luxury tax
for sales of sedans and two-wheel drive cars with engine power
below 1,500 cc, according to a statement from the coordinating
ministry of economic affairs late on Thursday. The current
luxury tax rates for such sales range between 10% to 30%.
In the next three months after that, the government will
give a 50% discount for luxury tax payments and the following
three months, the discount will be halved, the ministry said,
adding that the scheme would be evaluated every three months.
Car sales in Southeast Asia's largest economy have recovered
after a dramatic plunge at the beginning of the pandemic, but
have yet to return to pre-pandemic levels. Total sales in 2020
were just over 532,000 units, about half of the previous year.
The economic ministry said the auto industry is important
for Indonesia's economy, with car makers, dealers and workshops
providing employment for 1.5 million people. The tax incentive
could boost production by 81,752 units, the ministry said.
Indonesia's gross domestic product contracted for the first
time since the 1998 Asian financial crisis last year, by 2.07%,
as the pandemic dealt a blow to household consumption and
investment.
The car market in Indonesia is dominated by Japanese brands,
with Toyota 7203.T , Daihatsu 6023.T , Mitsubishi 7211.T and
Honda 7267.T leading sales.
The automakers association Gaikindo had previously been
pushing the government for months for tax breaks to entice
buyers. urn:newsml:reuters.com:*:nL4N2BW20O
Gaikindo and car companies were not immediately available to
comment due to public holiday.
(Reporting by Bernadette Christina Munthe and Tabita Diela
Writing by Gayatri Suroyo
Editing by Ed Davies)
((gayatri.suroyo@thomsonreuters.com; +622129927609; Reuters
Messaging: gayatri.suroyo.thomsonreuters.com@reuters.net))