JAKARTA, The Indonesian government extended tax discount or sales tax on government-borne luxury goods, locally known as PPnBM, by 100 percent, for motorised vehicles, as an effort to spur consumption of the middle class amid the pandemic.
The tax discount for motor vehicles, which was formerly given from Mar to Aug, 2021, was extended to Dec, 2021, Head of the Fiscal Policy Agency of the Ministry of Finance, Febrio Kacaribu, said, in a statement on Friday.
The 100 percent tax discount was extended for 4×2 (two-wheel drive/2wd) passenger cars with an engine capacity of up to 1,500 cc, meanwhile, the 50 percent tax discount was for 4×2 (2wd) passenger cars, with the capacity of more than 1,500 cc to 2,500 cc, and 25 percent tax discount given to 4×4 (4wd) vehicles with capacity of 1,500 cc to 2,500 cc.
Meanwhile, the excess of PPnBM on the purchase of motorised vehicles in Sept, 2021, will be returned by the taxable companies that make the tax collection, Kacaribu said.
Cumulatively, from Jan to July, 2021, retail car sales grew by 38.5 percent, compared to the same period last year, showing a positive trend as a result of the policy on tax discounts.
“With the increase in sales, motor vehicle manufacturers can resume operations with higher capacities,” he said.
Car production from Jan to July, 2021, was able to grow 49.4 percent year-on-year (yoy), so that it was not only able to meet domestic needs but also exports of Completely Knocked Down (CKD) vehicles, which grew 169.7 percent in the same period, he said.
Industry Minister, Agus Gumiwang Kartasasmita said, there would be additional 2.2 trillion rupiahs (about 155.6 million U.S. dollars) in tax revenue, from the 100 percent discount policy on the government-borne luxury goods sales for motorised vehicles until the end of 2021.
“We project additional 2.22 trillion rupiahs (about 155.6 million dollars) in tax revenue, with the increase in car sales supported by the policy,” the minister said in a statement, Friday.
According to him, based on the ministry’s analysis, the extension of the tax discount until Dec, 2021, was projected to increase vehicle sales by 35,553 units.
Kartasasmita pointed out that the extension of the tax discount was also considered to have accelerated the recovery of the automotive industry, as well as, increased state revenues.
The minister added that, the growth of the manufacturing sector in the second quarter was driven by the fast growth of the automotive industry, which reached 45.7 percent.
In addition, data on sales of four-wheeled vehicles under 1,500 cc in the Jan-Aug, 2021 period was recorded at 175,000 units. This figure shows an increase of 51.0 percent year-on-year compared to the same period in 2020.
With the extension of the policy, the minister hoped that Purchasing Manager’s Index (PMI) of the Indonesian manufacturing sector could return to an expansive path or be above 50, as happened for eight consecutive months from Nov, 2020 to June, 2021.
“With the industry being expansive and optimistic about carrying out its activities, we estimate that industrial growth in the third quarter of 2021 could be even better,” said the minister.
Legislator Mukhtarudin appreciated the government’s measure in extending the 100 percent discount on the sales of luxury goods borne by the government for motorised vehicles until the end of 2021.
“The domino effect of this previous policy was quite significant for the economy of the nation and the state. And the government’s decision is right to extend the policy again,” Mukhtarudin said in a statement yesterday.
Previously, the Industry Minister sent a letter to the Finance Minister, regarding the proposed extension of the tax discount for Sept to Dec, 2021.
Mukhtarudin added that, the policy would give benefits not only to the industrial sector but also to the supporting industrial sector.
Source: Nam News Network