Sales Tax

Perodua is relieved that the Ministry of Finance (MoF) will allow car-buyers to remain entitled to the sales tax exemption even though the provision ends at the end of this month. A recent announcement by the MoF said that those who book their vehicle by June 30, 2022, will still pay the lower price even if their vehicles are not delivered yet.

However, manufacturers will have to deliver the new vehicles to them before March 31, 2023 as that is the latest date they must register their vehicles if they want to enjoy the sales tax exemption.

“We sincerely thank the government for this announcement as it gives the industry and the market breathing room to meet consumers demand while at the same time give the players time to overcome various issues that are affecting the industry,” said Perodua President & CEO, Dato’ Zainal Abidin Ahmad.

He said among the issues that are currently impacting the local automotive suppliers range from the lingering impact of COVID-19, the component shortages and manpower shortages. These have led to vehicle supply shortages as vehicles cannot be completed. As a result, customers have had to wait longer and have been concerned that they will miss out on their tax exemption benefit if they get their vehicles are June 30.

“The issues are currently being addressed as Perodua and our suppliers are finding solutions and this registration extension will give us much needed room to overcome the issues,” Dato’ Zainal said. He added that, for Perodua’s customers, this announcement gives them much needed reassurance that they would be able to enjoy the sales tax exemption incentive that has boosted the industry since the year 2020.

Myvi remains the bestselling model for the Malaysian brand.

“To date, we have significant outstanding orders which we are working to fulfil. We appreciate our customers’ patience in this regard,” Dato’ Zainal said. On deliveries so far, he said that Perodua has registered 106,179 vehicles between January and May this year, which is 10% more than 96,281 units registered in the same period last year.

In terms registration according to model, the Myvi remains the most popular with 31,689 units registered in the first 5 months of this year. Next has been the Axia with 24,024 units delivered, and the Bezza at 23,336 units.

To know more about Perodua products and services or to locate a showroom for a test-drive, visit www.perodua.com.my.

No further exemption of sales tax after June 30, but registration can be in 2023

New vehicle prices in Malaysia are high due to the high tax rates imposed and because taxes from vehicle sales contribute such a huge amount of revenue, the government has never been able to bring itself to lower tax rates. However, as part of the national recovery plan to boost the nation’s economy after the depression caused by the COVID-19 lockdowns, sales tax was exempted to lower purchase costs.

As always, being able to sell cars at lower prices helps, and the the exemption was initially given from mid-June 2020 to the end of that year. The lowered prices attracted many to buy new vehicles, in spite of uncertainties about the future due to the pandemic. The brisk sales certainly helped the car companies in their recovery and it was hoped that the exemption could be extended a bit longer.

The Finance Ministry agreed and gave another 6-month extension to the end of June, 2021. The exemption applied to vehicles assembled locally as well as those imported in CBU (Completed Built-Up) form. The former would get full exemption of sales tax which is 10%, while the CBU models would qualify for half the exemption, ie 5%. However, the exemption was not applicable to commercial vehicles and pick-ups.

Appeals by the Malaysian Automotive Association (MAA) for a further extension saw the Finance Ministry allowing another period of exemption till the end of 2021. While demand remained high, the industry was hit by the global microprocessor shortage which affected production of vehicles, and the industry asked for another extension as it was still recovering. The Finance Ministry was again agreeable, allowing the extension to the end of June 2022.

RM4.7 billion tax not collected
To date, a total of 868,422 units of vehicles have been sold (during the period of sales tax exemption) and the government has sacrificed RM4.7 billion of taxes, according to the Finance Ministry.

In the past month, the industry has been hopeful that the government will again extend the exemption till the end of 2022. But this time, it looks like the expiry date will not change. The government believes that with the opening of the economic sector, the automotive sector has returned to normal operations.

It does recognise that there are supply issues due to the microchip shortage that prevents vehicles from being completed, and therefore there is a backlog of orders to be met. Many who have made bookings months ago are concerned that they will not enjoy the lower prices with tax exempted if their vehicle is not delivered and registered by the last day of this month. The Finance Ministry is aware that at least 264,000 vehicles already ordered during the exemption period have not been delivered to buyers due to not being available.

The global shortage of microprocessors used in vehicle electronic systems has affected production and there is a shortage of vehicles for delivery.

Register vehicle by March 2023
As a compromise, while the government will not extend the exemption period, it will allow those who have booked new vehicles up till June 30, 2022 to have the exemption even if their vehicle is not delivered yet. They must however register the new vehicle with JPJ by March 31, 2023, which should be enough time for delivery.

“The extension of the vehicle registration period is a mid-point solution to balance the interests of consumers and national tax revenue that needs to be increased post-pandemic to ensure the welfare of the people and the country’s economic well-being continue to be preserved,” said Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz.

So if you thought that because there’s a long backlog of orders for the vehicle you want to buy and there is no point booking now, if you do so before the end of the month, you will still enjoy the lower price with sales tax exemption.

The Prime Minister tonight announced that the exemption of Sales Tax (SST) which began on June 15, 2020 and was due to end at the end of 2020 but was then extended till June 30, 2021 has again been extended. This time, the extension continues till the end of 2021. The exemption is provided as one of the measures to help support business sustainability in these difficult times, especially with another imposition of a total lockdown forcing many businesses to close from June 1 to June 14.

The exemption conditions are unchanged: for all models assembled locally, full exemption of the 10% tax will be given while for models imported in XBU (completely built-up) form, the exemption will be half, ie 5%. While the savings for low-priced models may not be significant, they can be amount to quite a lot for the more expensive models.

The sales tax exemption has not been provided for pick-up trucks as they are classified as commercial vehicles, and the government is already providing other forms of support to the commercial sector.



Follow us on Facebook

Follow us on YouTube