The Jakarta Provincial Government is mulling abolishing progressive taxation on motor vehicles in a bid to enhance the precision of vehicle ownership information. The proposed move seeks to resolve issues regarding vehicle registration and transparency in ownership.
Key Points
- The elimination of progressive tax could simplify vehicle ownership data management.
- The decision was discussed during a meeting at DKI Jakarta City Hall.
- The move follows concerns about individuals attempting to avoid taxes by registering vehicles under false or borrowed identities.
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Progressive Vehicle Tax Under Review
Agus Fatoni, Director General of Regional Finance, stated that eliminating the progressive car tax scheme could help achieve more reliable data on car ownership. The progressive tax, increasing according to the number of cars owned, has prompted some owners to attempt to bypass taxes by using different names or even borrowing someone else’s ID cards.
Current Progressive Tax System in Jakarta
As of January 2025, Jakarta’s new vehicle tax rates are structured in a progressive manner. Under the current system, the tax rates increase with the number of vehicles an individual owns. The progressive tax rates are:
- 2% for the first motor vehicle.
- 3% for the second motor vehicle.
- 4% for the third motor vehicle.
- 5% for the fourth motor vehicle.
- 6% for the fifth and subsequent vehicles.
These rates aim to encourage responsible vehicle ownership and decrease the number of vehicles registered under other names
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Vehicles Exempt from Progressive Tax
Certain types of vehicles are exempt from the progressive tax rates:
- Public transportation vehicles
- Employee transport
- School transportation
- Ambulances
- Fire engines
- Social and religious institutions
- Government vehicles
- DKI Jakarta Provincial Government vehicles
For these, the tax rate is set at just 0.5%.
Moving Toward More Accurate Data
The move to eliminate the progressive vehicle tax system comes in response to the ongoing issue of vehicle owners using various tactics to avoid the tax, including registering vehicles under corporate names or using borrowed IDs. This change aims to make the vehicle registration system more transparent, ensuring that vehicle ownership directly ties to the individual owner.
Key Highlights
- Proposed Tax Elimination: Jakarta government might eliminate progressive taxes for more accurate vehicle ownership data.
- Progressive Tax Rates: New vehicle tax rates in Jakarta include higher taxes for owners of multiple vehicles.
- Exemptions: Certain vehicles like public transportation and government vehicles will face lower tax rates.
- Addressing Evasion: The reform aims to prevent individuals from registering multiple vehicles under false identities.
Also read: Car Road Tax and Ownership Costs in Indonesia
Conclusion
While the new tax rates will be effective from January 2025, discussions about abolishing the progressive vehicle tax point to Jakarta’s on-going efforts to enhance the precision of vehicle ownership data and plug loopholes in the existing tax system.