Budget 2022: Expiry date of 0% import and excise tax for BEVs - 2023 for CBUs, 2025 for CKDs

Hans · Oct 30, 2021 04:05 PM

Budget 2022: Expiry date of 0% import and excise tax for BEVs - 2023 for CBUs, 2025 for CKDs 01

Following yesterday’s Budget 2022 announcement by Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz that import, excise, and road tax will be waived for all electric vehicles, we now have further details regarding the tax exemption period.

The tax exemption applies only to battery electric vehicles (BEVs) like a Nissan Leaf, MINI Electric, BMW iX, or a Tesla. Regular hybrid electric (HEV) models like a Toyota Corolla Cross Hybrid or plug-in electric models like a BMW 330e don’t qualify.

Budget 2022: Expiry date of 0% import and excise tax for BEVs - 2023 for CBUs, 2025 for CKDs 02

As expected, the tax-free period is only for a very short time, specifically 2 years, between 1-January 2022 and 31-December 2023 for fully imported (CBU) models.

The provisions mentioned above applies to all newly registered BEVs, regardless if it’s imported by an authorized distributor like BMW Group Malaysia, or a parallel importer selling a recond model from the UK.

The 10 percent sales tax, which are now at discounted 5 percent rate for CBUs (which all BEVs on sale today are anyway) as part of the government’s initiative to bolster the local car industry, will still apply.

Budget 2022: Expiry date of 0% import and excise tax for BEVs - 2023 for CBUs, 2025 for CKDs 01

Finance Minister Tengku Zafrul's announcement yesterday mentioned sales tax exemption alongside import and excise tax exemption, but a closer look at the document shows sales tax exemption applies only to CKD BEVs, which there is none at the moment.

In the longer-term, the government wants to promote local assembly of BEV models and to achieve that, CKD BEV models enjoy a longer period of exemption for import tax and excise tax, from 1-January 2022 until 31-December 2025.

Budget 2022: Expiry date of 0% import and excise tax for BEVs - 2023 for CBUs, 2025 for CKDs 02

Imported parts used to assemble a CKD car currently attract a 10 percent import tax rate, while excise tax, which typically range from 60 to 105 percent depending on engine capacity (no revision made for BEVs yet), are capped at a flat rate of 10 percent for BEV models, regardless if it’s CKD or CBU.

On top of that, CKD BEVs will also enjoy an exemption from the 10 percent sales tax, also until 31-December 2025.

Tax incentive for BEVs, Malaysia
  CKD CBU
Import tax 0%
1-Jan 2022 - 31-Dec 2025
0%
1-Jan 2022 - 31-Dec 2023
Excise tax 0%
1-Jan 2022 - 31-Dec 2025
0%
1-Jan 2022 - 31-Dec 2023
Sales tax 0%
1-Jan 2022 - 31-Dec 2025
5% until 30-Jun 2022,
10% after
Road tax RM 0
15-Feb 2022 - 31-Dec 2025
Personal income tax Up to RM 2.5k rebate for expenses on BEV charging hardware / services

The personal income tax rebate of up to RM 2,500 for the purchase / installation / rental / subscription / hire-purchase of BEV charging facilities will be valid from 2022 until 2023 (income tax assessment year).

There are quite a few more questions that we don’t have answers yet. When will the road tax exemption expire? Based on present information, it appears the exemption will end on 31-December 2023.

Budget 2022: Expiry date of 0% import and excise tax for BEVs - 2023 for CBUs, 2025 for CKDs 03

Road tax for Nissan Leaf - RM 187

At the moment, the respective car companies are still trying to clarify a few more details before they can communicate further. The fact that the announcement was made on a late Friday evening doesn’t help matters.

Also, this is technically just a proposal and has yet to be passed by the Parliament. So some details won’t be finalized yet although based on past history, what’s proposed in the Budget is usually passed as it is.

Budget 2022: Expiry date of 0% import and excise tax for BEVs - 2023 for CBUs, 2025 for CKDs 04

The other question is what’s going to happen to customers who are taking delivery of their BEV models soon.

Budget 2022: Expiry date of 0% import and excise tax for BEVs - 2023 for CBUs, 2025 for CKDs 05

If you’ve booked a Porsche Taycan or a MINI Electric and your vehicle will be arriving this month, do you get to enjoy the tax exempted price?

Going by the book, you will have to pay the current full-tax price, as the duties must be paid the moment the car leaves the Customs bonded zone, which typically means the shipping port.

Since this is a tax related matter and it’s a huge sum, it’s hard to expect any solution from your Porsche / MINI dealer.

Customs also have provisions to allow a small number of cars to leave the port without duties paid, but only for a short period of time, and the car has to go directly to a declared bonded zone, like a showroom for example. If the car is unsold, it has to go back to the port.

Budget 2022: Expiry date of 0% import and excise tax for BEVs - 2023 for CBUs, 2025 for CKDs 06

For these small number of cars, there might be a chance of narrowly avoiding tax if the vehicle’s registration is delayed until January 2022.

Follow us for more updates on this matter.

Hans

Head of Content

Over 15 years of experience in automotive, from product planning, to market research, to print and digital media. Garages a 6-cylinder manual RWD but buses to work.

Comments

Up to 20% higher than average trade-in price

2018 MINI 3 Door Cooper

Upgrade

Add your car

Service powered by carsome

Latest Cars