APPI Assesses Rising Vehicle Tax Could Shrink Sales

KatadataOTO – The Indonesian government is implementing various new policies in 2025. For example, the increase of VAT (Value Added Tax) to 12 percent.

Then a number of regions also enacted a surcharge on PKB (Vehicle Tax) and BBNKB (Motor Vehicle Title Transfer Fee).

APPI (Indonesian Financial Services Association) believes that these various new vehicle taxes will actually have many impacts.

“First, in my opinion, vehicle purchases in Indonesia will still be made more on credit than in cash,” said Suwandi Wiratno, Chairman of APPI, during a Forwot (Automotive Journalists Forum) discussion titled 'Automotive Financing Opportunities' some time ago.

Photo : Courtesy

Suwandi explained that the implementation of the 12 percent VAT as well as the PKB surcharge and BBNKB could have a negative impact.

Such as a decrease in public purchasing power in the four-wheeled and two-wheeled vehicle sectors this year.

“Well, if it still happens, car sales are predicted to drop to 700 thousand units (this year). However, if not, there could at least be massive layoffs (PHK) in Indonesia,” Suwandi continued.

He said that the vendors for domestic manufacturers are MSMEs (Micro, Small, and Medium Enterprises).

Therefore, they will certainly be the first to be affected if there is an increase in vehicle taxes this year. So, the various policies above are a heavy burden on the industry.

Appreciation for Surcharge Relaxation

On the other hand, Suwandi appreciates the steps taken by a number of regions that are providing relaxation during the implementation of the PKB and BBNKB surcharges.

“This means there will be no increase, but the incentive for its implementation is only for three, six, to 12 months,” Suwandi stated.

As is known, there are several relaxations provided by regional governments. Take Jakarta for example, which is not implementing the PKB and BBNKB surcharges.

Then, Central Java also provides leniency for car and motorcycle owners in the Semarang, Solo, and other areas.

Photo : KatadataOTO

“The motor vehicle tax rate, previously set at 1.5 percent in Regional Regulation (Perda) No. 2 of 2011, has been lowered to 1.05 percent in accordance with Perda No. 12 of 2023,” reads the announcement on the @bapenda_jateng Instagram account.

Bapenda Jateng (Central Java) also adjusted the BBNKB rate. Previously 12.5 percent, it is now set at only 10 percent.

Therefore, there is no increase in vehicle taxes in Central Java even though the local government is implementing the BBNKB and PKB surcharges in 2025.