April 23, 2026 | 06:32 pm
TEMPO.CO, Jakarta - The Ministry of Home Affairs has granted regional governments the authority to levy taxes on electric vehicles (EVs) through Ministerial Regulation Number 11 of 2026. Under this new mandate, electric cars and motorcycles are no longer exempt from Motor Vehicle Tax (PKB) and Motor Vehicle Transfer Fees (BBNKB).
However, Andry Satrio Nugroho, an economist at the Institute for Development of Economics and Finance (Indef), argues that the policy requires a review due to several inherent complications. One of them is a potential conflict with Law Number 1 of 2022 regarding Financial Relations between the Central and Regional Governments (HKPD), where Article 7 explicitly stipulates that renewable energy-based vehicles remain exempt from PKB.
Furthermore, Andry believes that delegating the authority to determine tax rates to local governments could potentially create loopholes for tax avoidance. This risk arises because regional heads now possess the discretionary power to decide whether to impose these taxes at all.
He explains that such a landscape may encourage owners to register their vehicles in jurisdictions offering lower rates or continued incentives. This shift could create regional disparities and significantly undermine the policy’s overall effectiveness.
"There is a potential for tax payments to migrate toward regions offering larger incentives. So, a form of tax avoidance may emerge if certain areas persist in taxing electric vehicles [while others do not]," Andry remarked.
Agus Fatoni, the Director General of Regional Financial Management at the Ministry of Home Affairs, has yet to respond to interview requests or inquiries sent to his mobile phone.
At the local level, West Java Governor Dedi Mulyadi has indicated that his administration will continue to tax electric vehicles. He maintained that vehicle taxes remain a vital source of regional revenue.
Dedi believes that the total absence of motor vehicle taxes, compounded by potential delays in revenue-sharing funds, would leave regional governments struggling to finance development projects. "My hope is that the tax continues to serve as a contribution to the region. After all, these motorcycles and cars still use the public roads," he stated on Monday, April 20, 2026.
Read: Hyundai Seeks Clarity on EV Taxes Across Indonesia
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