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INDONESIA: Sedan Tax Rates Set to be Cut in Bid to Boost Domestic Auto Industry

Taxes on the sale of sedans, currently fixed at 30-40%, are set to be cut under the proposed changes to the country’s Value Added Tax and Luxury Goods Sales Tax Law. At present, sedans are designated as luxury vehicles, a classification that has been assigned a higher tax bracket than most everyday cars, which are typically taxed at around 10-20%, depending on engine size.

Although further details of the proposed tax cut, which is currently before the country’s Parliament, have yet to be announced, the Indonesian government anticipates the measure will inevitably lead to a surge in sedan sales. This, in turn, will provide a much-needed boost to the country’s domestic vehicle manufacturing sector.

Content provided by Picture: HKTDC Research
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