Motor Vehicle Tax in Indonesia is Said to be the Highest in the World
Indonesia’s motor vehicle tax is said to be one of the highest in the world. This was stated by the Association of Indonesian Automotive Industries (Gaikindo), which believes the high tax burden makes it difficult for car prices in the country to compete with other countries.
Gaikindo Secretary General Kukuh Kumara compared Indonesia with neighboring countries like Thailand and Malaysia. He stated that taxes in Indonesia can be five to 30 times higher.
“Several years ago, I was asked by a representative of the U.S. Automotive Council and they said that vehicle taxes in Indonesia are the highest in the world. After I checked, it turned out to be true,” Kukuh said, as quoted on Monday (September 8, 2025).
Kukuh gave the example of an Avanza car produced in Indonesia, where the annual tax can approach IDR 5 million. Meanwhile, in neighboring countries that import cars from Indonesia, the annual tax is less than IDR 1 million. Even in Thailand, the annual tax burden is only around IDR 150,000.
Thailand’s Vehicle Taxes More Competitive
A similar sentiment was expressed by the Institute for Economic and Social Research, Faculty of Economics and Business, University of Indonesia (LPEM FEB UI). LPEM FEB UI Senior Researcher, Riyanto, stated that Thailand’s car tax instruments are far more competitive than Indonesia’s.
“If you calculate it, almost half of the on-the-road price of a car in Indonesia is tax. It’s around 40 percent. Meanwhile, in Thailand, it’s only around 32 percent,” Riyanto explained.
He added that the striking difference is seen in the Motor Vehicle Ownership Transfer Fee (BBNKB), which in Indonesia reaches 12.5 percent, while in Thailand it’s not collected at all.
“Moreover, our current VAT is 11 percent, while Thailand’s is only 7 percent. So it’s natural that car prices there are much cheaper,” he said.
According to Riyanto, if Indonesia wants to be more competitive, adjustments to tax instruments are needed, especially at the regional level. “If you want to compete with Thailand, you have to make sacrifices, one of which is through lowering vehicle tax rates,” he concluded.
