Summary Description
- Implements a carbon tax on all GHG emitting activities, including the agriculture sector in 2025.
- TopicThe topic of the legislation or policy covered by the text
- Climate & environmental protectionTaxation
- SpeciesThe animal, or type of food production, covered by the text
- Farmed animals
- JurisdictionCountry or geographical area where the text applies
- Indonesia
- Sub-jurisdictionCountry or state where the text applies
- N/A
- Type of ActWhether the act is a law, regulation, or policy, or another type of text
- Legislation
- StatusIndicates whether the act is in force or not
- In force
- Legal ValueWhether the text is binding or not
- Binding
- Date enactedDate the text was adopted
- 2021
- Date updatedDate when the entry was last updated by the CALF team
- June, 2023
- Official citation
- Indonesia Law No. 7 of 2021 on Harmonization of Taxation Regulation
Strengths & Weaknesses
- Strengths
- The scope of the carbon tax is broad and extends to:
- Individuals or organisations that purchase carbon-containing goods or engage in activities that generate carbon emissions over a certain period.
- All businesses that emit substantial amounts of carbon in sectors such as energy, transportation, waste and agriculture.
- A range of GHGs, including Carbon Dioxide (CO2), Methane (CH4) and Nitrous Oxide (N2O).
- The revenues generated from the carbon tax will be allocated to tackle climate change.
- Weaknesses
- While the tax rate is set to be higher than the market price, the minimum tariff is too low (IDR 30 per kg. Co2e) to trigger behavioural change.
- The tax will start applying to the agricultural sector in 2025 only and it is still unclear what will the tariff rate be for this sector, and whether exemptions will be granted.
- Indonesia's broader climate policy does not include the elimination of harmful subsidies, and still provides subsidies to fossil fuels which outweigh the spending on climate activities, thereby posing issues regarding policy coherence.