Mercedes: SST cut should be extended, true extent of Covid-19’s impact visible in 2022

The current exemption / discount of the 10 percent sales tax for locally-assembled vehicles (full exemption) and imported vehicles (payable at half rate) will expire on 31-December 2021. With taxes contributing a major portion of car prices in Malaysia, many industry players are suggesting that the 10 percent sales tax for cars should be permanently abolished.

The argument is that the current sales tax cut has been proven to spur sales and since the government is still earning from import and excise tax (which are way more than sales tax) from every car sold , the increase in sales volume should in theory, cushion the shortfall in sales tax revenue.

Of course, this is a long shot (not forgetting that re-imposition of GST have also been suggested), but Mercedes-Benz Malaysia’s opinion is that the sales tax cut should be extended into 2022, after which the true extent of Covid-19’s impact on the local economy will only be visible.

Speaking at a virtual meeting with the local press earlier today, Michael Jopp, Vice-President of Mercedes-Benz Malaysia said the sales tax exemption has lead to an immediate recovery of the very negative situation in sales, not only for Mercedes-Benz but also Malaysia’s car industry as a whole.

“It has really helped the industry to sustain during this phase. It’s a more than welcomed support to push consumer confidence. Obviously for the time being, we expect the sales tax exemption will be valid until the end of the year. We will certainly welcome an extension into next year.

“If you look at the overall economic situation of the country, possibly the true picture will only be visible next year, once everything moves back to normal. So from that perspective, it will more than welcomed if it could be extended to maintain that momentum that we now see again with the showrooms reopening.

“This is our position so we will wait and see how the Ministry of Finance will decide,” said Jopp.