The Indonesian Minister of Energy and Mineral Resources (ESDM), Bahlil Lahadalia, has outlined a proposal to differentiate tax treatment between internal combustion engine (ICE) vehicles and electric vehicles. The measure is part of a strategy to support the transition from fossil fuels to alternative energy sources, while encouraging the adoption of electric vehicles in the domestic market.

"Perhaps in the future, it is necessary to introduce a policy that taxes petrol-powered vehicles differently from electric vehicles, as the latter are cheaper, more environmentally friendly, and less dependent on fuel imports," he stated at the IPB Alumni Synergy for the Nation event, which was broadcast online on May 4th, 2026.

According to the Minister, the adoption of electric vehicles is also linked to efforts to maintain the country's fiscal position. Energy subsidies remain a component of the state budget.

"The costs are relatively lower, so the conversion to electric vehicles needs to be continuously encouraged," he further added.

On the regulatory side, discussions regarding electric vehicle taxation are ongoing. Previously, electric vehicles benefited from exemptions from the Motor Vehicle Tax (PKB) and the Motor Vehicle Ownership Transfer Fee (BBNKB). However, under Minister of Home Affairs Regulation No. 11 of 2026, electric vehicles are no longer automatically exempt. This indicates that they may now be subject to PKB and BBNKB. The regulation continues to provide for incentives. Article 19 states that battery-based electric vehicles may receive tax exemptions or reductions, applicable to both new units and those already in circulation prior to 2026.

This framework indicates that incentive policies will depend on decisions taken by individual regional governments. Subsequently, Tito Karnavian requested that all regional governments continue to provide fiscal incentives for electric vehicles. This directive was outlined in Circular Letter No. 900.1.13.1/3764/SJ, dated April 22nd, 2026.

In the circular, governors are instructed to consider exempting PKB and BBNKB for electric vehicles in order to support economic stability amid fluctuating global energy prices, while also contributing to the development of alternative energy. Regional governments are also required to report the policies adopted regarding these incentives to the Ministry of Home Affairs by May 31st, 2026.