Jakarta Reviews Emissions for the Implementation of Vehicle Tax

The Environmental Agency of the Special Capital Region (“ DKI ”) of Jakarta is currently reviewing the determination of the Environmental Pollution Coefficient (Koefisiensi Pencemaran Lingkungan- “ KPL ”) as the basis for implementing an emissions-based Motor Vehicle Tax (Pajak Kendaraan Bermotor- “ PKB ”), as well as for its use as an instrument to control air pollution in Jakarta.

“Air pollution in Jakarta originates primarily from motor vehicles; therefore, measures are needed to internalize environmental externality costs into fiscal instruments such as the PKB,” said the Head of the DKI Jakarta Environmental Agency, Asep Kuswanto.

Through this assessment, motor vehicles that fail to pass emission testing may be subject to tax disincentives. This policy aligns with the mandate of Regulation of the Government No. 22 of 2021 on the Implementation of Environmental Protection and Management (“ PP 22/2021 ”), particularly with respect to compliance with motor vehicle emission standards. In parallel, the Provincial Government of DKI Jakarta is also in the process of drafting a Regional Regulation on Air Quality Protection and Management Plan (Rencana Perlindungan dan Pengelolaan Mutu Udara- “ RPPMU ”).