The Ministry of Finance is expected to issue technical regulations later this month specifying the requirements for hybrid electric vehicle (HEV) models to qualify for government incentives.

Under the initiative, hybrid vehicles will receive a 3% reduction in the luxury goods sales tax (PPnBM DTP), which is borne by the government.

Rustam Effendi, a Policy Analyst at the Fiscal Policy Agency of the Ministry of Finance, stated that the Minister of Finance Regulation (PMK) outlining the technical details and eligibility criteria for these incentives is currently under development.

"The PMK is in progress and is expected to be issued before the end of January 2025," Rustam said on 5th January 2025.

The criteria for the 3% PPnBM DTP incentive require vehicles to be manufactured in Indonesia and classified as Full Hybrid or Mild Hybrid under the Low Carbon Emission Vehicle (LCEV) programme. These requirements are detailed in the Minister of Industry Regulation (Permenperin) Number 36 of 2021.

According to Article 6 of this regulation, eligible hybrid vehicles must have a cylinder capacity not exceeding 4,000 cc. Gasoline-powered hybrids must achieve fuel efficiency of over 15.5 km per litre, and diesel-powered hybrids must exceed 17.5 km per litre.

The Ministry of Finance also plans to issue additional regulations establishing minimum domestic content (TKDN) requirements for hybrid vehicles to qualify for the PPnBM DTP incentives.

"For hybrids, the PPnBM is reduced by 3%, with consumers paying the remaining amount. For example, full hybrids previously taxed at 6% will now be taxed at 3%," Rustam explained.

Hybrid vehicles locally assembled in Indonesia that may benefit from these incentives include the Toyota Yaris Cross Hybrid, Toyota Kijang Innova Zenix Hybrid, Suzuki Ertiga Hybrid, Suzuki XL-7 Hybrid, Wuling Almaz RS Hybrid, Hyundai Santa Fe Hybrid, and GWM Haval Jolion HEV.