VOI - Voice of Indonesia | RRI - Radio Republik Indonesia

File photo of motorists in Jakarta, Indonesia, on May 20, 2021. (Photo: AP/Achmad Ibrahim) - 

Indonesia aims to extend a luxury tax break on the sale of sedans and two-wheel drive cars with engine power of less than 1,500 cc to August to support its pandemic-hit automotive industry, the industry ministry said on Sunday (Jun 13).

The tax was fully removed in March and was supposed to be re-imposed at 50 per cent from June. The 50 per cent discount will now apply from August to December.

A spokesperson at the Finance Ministry said the plan was being discussed.

Car sales in Southeast Asia's largest economy grew after the tax break was introduced in March after months of sluggish sales due to the pandemic but have yet to return to pre-pandemic levels.

Total sales in 2020 were just over 532,000 units, about half the previous year.

In April, the government introduced a 12.5 per cent to 50 per cent tax discount on the sale of four-wheel drives and cars with engine capacity of up to 2,500 cc manufactured with at least 60 per cent domestically sourced components.

That discount is in effect until the end of 2021.

Indonesia's gross domestic product contracted for the first time since the 1998 Asian financial crisis last year, by 2.07 per cent with household consumption and investment declining//CNA