New Passenger Vehicles To Enjoy Exemption On Sales Tax

As part of a multi-billion Ringgit stimulus package to revive the economy of Malaysia, Prime Minister YAB Tan Sri Dato’ Haji Muhyiddin bin Haji Mohd Yassin has announced that the automotive industry and consumers will benefit from one of its plans.

In order to spur vehicle sales and sustain automotive makers and dealers, the government has agreed to provide exemptions on the sales tax for new cars. For passenger vehicles which are locally assembled (CKD), there will be an 100% exemption on the sales tax. While for imported vehicles (CBU), it is a 50% exemption. The exemption is for sales recorded from 15 June until 31 December 2020.

Currently, our sales tax is 10%.

But as we consumers rejoice with this ‘discount’, we also have to bear in mind that this will reduce the government’s tax revenue (the sales tax is collected by the car dealership and is to be paid to the government). Still, such moves are necessary to motivate sales and the circulation of money within the local economy. This should have a positive effect on the economy when factored together with the other stimulus initiatives.

Below is the excerpt of the PM’s speech with regards to the subject:

“Selain itu, bagi menggalakkan pertumbuhan industri automotif negara, Kerajaan bersetuju memberi pengecualian cukai jualan sebanyak 100 peratus ke atas penjualan kereta penumpang pemasangan tempatan, dan 50 peratus bagi kereta penumpang yang diimport bagi tempoh mulai 15 Jun 2020 hingga 31 Disember 2020.”