AG: RM 5.92m in taxes for recond cars lost, Mercedes-AMG G63 declared as GLA 180

The latest Auditor General report for 2020 released last week revealed that based on their investigation of 669 parallel imported recond cars, Customs collection of import taxes is short by RM 5.92 million.

Out of the 669 samples of randomly selected grey market cars imported in 2019 and 2020, 28 were found to have the vehicles’ values under-declared by a total of RM 2.58 million, resulting in loss of RM 5.92 million in import tax collected.

Investigation into the chassis numbers also found discrepancies in information declared in the vehicles’ importation document provided to Customs versus JPJ’s vehicle registration system.

Among the examples were a Mercedes-AMG E53, which has a gazette value (the base value Customs use to calculate import and excise tax value) of RM 204,975 and a taxable amount of RM 395,909, but was imported into the country with documents declaring it as a Mercedes-Benz E200 CGI valued at just RM 30,714, with just RM 48,343 in taxes.

Comically, there’s also a BMW 850i that was declared as a BMW 550i. Well, 5 looks like an 8 right?

The BMW 550i was declared to Customs at RM 40,472, with RM 78,171 in payable taxes. The BMW 850i has a gazette value of RM 267,857, with RM 517,365 in taxes payable.

Another example singled out in the Auditor General’s report was a Mercedes-AMG G63, which has a gazette value of RM 688,114 and RM 688,114 in taxes payable, but was declared to Customs as an entry-level Mercedes-Benz GLA 180, valued at RM 51,017, with RM 69,357 in taxes payable.

In response, the Customs Department told the Audit Committee that it has opened an investigation into 11 cases, and the investigation papers have been submitted to the Court for prosecution, for tax fraud.

There were also cases where clerical errors have allowed certain more exotic variants of supercars to slip past the Customs tax net, being taxed less than they should. Custom officers had erroneously under-valued some cars by referring to the wrong gazette value.

Two Lamborghini Huracan LP 610-4 were valued as a lower range LP 580-2, which resulted in a loss of RM 47,617 and RM 37,036 respectively (differences due to age of vehicle).

There were also 3 cases of manipulation of the vehicle’s age. The Audit Committee found a 15-month old Porsche Cayenne, which should have a gazette value of RM 81,979 and RM 158,342 in import taxes payable, was imported into the country with documents stating that it’s a 4 to 5-year old car (tagged as 48- to 60-month old). Customs lost RM 71,297 in import taxes on this particular car alone.

The remaining two cases were a 24 months old Lamborghini Urus and a 27 months old Maserati Levante were declared as ‘60-months or older.’

The Auditor General report also noted that imported cars (new and reconditioned) contributed RM 3.527 billion in import taxes in 2019, and RM 2.691 billion in 2020. The short fall in 2020 was likely to be due to MCO.