Indonesia approves Low Cost Green Car ( LCGC) regulation

Vehicles must be assembled in Indonesia and meet a minimum standard of local components in order to be eligible for tax exemptions.

The Indonesian government has finally approved the long-awaited Low-Cost Green Car (LCGC) policy, which is a regulation on tax exemptions for the production of low-cost, eco-friendly cars in the country, reports Reuters. According to the policy, no luxury tax will be imposed on cars or station wagons (estates) with an engine capacity up to 1200cc and with a minimum fuel consumption of 20 kilometres per litre (km/l). Tax exemption will also apply to diesel vehicles of up to 1500cc, also with a minimum fuel consumption of 20 km/l. The eco-friendly vehicles, according to the regulation, must be assembled in Indonesia and meet a minimum standard of local components in order to be eligible for tax exemptions. The latest announcement regarding the policy was made in January, and it was signed on 23 May. Detailed rules and requirements for implementing the regulation will be announced soon.