Up To 100% Sales Tax Exemption Announced On New Cars In Malaysia

Ford f150 raptor

The Malaysian PM has announced tax exemptions to pull the country’s auto sector out of the slump, which includes slashing sales tax by up to 100 per cent on certain vehicles temporarily

The current prime minister of Malaysia, Tan Sri Muhyiddin Yassin recently announced a host of measures to bring the country’s economy back on track. The measures that were announced also brought a sigh of relief for the automotive industry in the country, since some relaxations were provided on certain type of imported vehicles.

The prime minister announced a 100 per cent sales tax exemption on locally-assembled CKD models, while a 50 per cent exemption has been announced on fully imported CBU models, starting from June 15, 2020 until the end of this year. This move will help overcome the lost sales and production in recent times, and we expect that all manufacturers currently operating in Malaysia will likely be welcoming it.

Considering the fact that the current sales and services tax (SST) in the country on both CKD and CBU passenger vehicles is set at 10 per cent, the prices of the car will go down significantly, and provide a much-required boost to the Malaysian auto industry, as well as the country’s overall economy.

toyota highlander-1

Auto manufacturers operating in the Indian market are also demanding a reduction in taxes since a pretty long time now, but it seems like the request keeps falling on deaf ears. The Indian automobile sector is one of the fastest-growing sectors, and currently makes up 27 per cent of the industrial gross domestic product (GDP) and 49 per cent of manufacturing GDP, while it also provides about 37 million jobs in the country, directly or indirectly.

As of now, the standard GST rate on internal combustion engine-powered personal vehicles ranges upto 28 per cent, while an additional compensation cess is applicable over and above the GST rate for automobiles is from 1% to 22%. However, the GST rate applicable to electric vehicles (EV) is set at 5 per cent, and such eco-friendly cars do not require you to pay any additional chess charge.

Similarly, two-wheelers with an engine capacity of up to 350 cc draw a 28 per cent GST, while bigger motorcycles additionally attract a 3 per cent cess over and above the GST rate.