- The Indonesian Government has decided to re-extend the discount incentives for Government-Borne Luxury Goods Sales Tax ("PPnBM DTP"), which will now remain in place until December 2021.
- The extended incentives include the following: 1) 100% PPnBM DTP for passenger motor vehicles with engine capacities of up to 1,500 cc; 2) 50% PPnBM DTP for 4×2 passenger motor vehicles with engine capacities of between 1,500 cc and 2,500 cc; and 3) 25% PPnBM DTP for 4×4 passenger motor vehicles with engine capacities of between 1,500 cc and 2,500 cc.
- According to Mr. Febrio Kacaribu, a representative from the Ministry of Finance, the incentives are being extended as a part of efforts aimed at stimulating middle-class consumption in line with positive developments relating to the handling of the Corona Virus Disease 2019 (COVID-19) pandemic. These positive developments have manifested themselves in the form of a 38.5 % growth in car sales over 2020 and 2021, an outcome that clearly demonstrates the value of the tax-discount incentive policy. As a result of this increase in sales, motor-vehicle manufacturers have been able to resume operations at higher capacities, with production growing by 49.4% in order to meet demand.
- Overall, the aforementioned positive developments are set to boost the Gross Domestic Product (GDP) figure for the industrial and transportation sector by double digits by the second quarter of 2021, possibly even heralding a return to maximum capacity.
- In addition, high levels of domestic production should also see a large multiplier effect within supporting sectors, such as the metal goods industry, basic metal industry, rubber industry and financial services. In the midst of the ongoing pandemic, fiscal policy will continue to be the optimal instrument employed by the government in order to maintain public health and safety, protect citizens’ purchasing power and inaugurate a sustainable pace of recovery within the broader global economy. (SETKAB)
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