Surprise U-turn sees government extending sales tax (SST) exemption/discount to June 2021

Hans · Dec 29, 2020 04:38 PM

This is a surprise to everyone, good or bad, it depends on how you see it. In a document sighted by, the Ministry of Finance has just announced today that existing sales tax (SST) exemption/discount for new and reconditioned cars under the Penjana stimulus package will be extended until 30 June 2021.

The announcement supersedes an earlier reply by the Ministry made on 23-December, denying the Malaysian Automotive Association’s (MAA) appeal to extend the SST exemption/discount, which was supposed to expire by 31-December 2020, to June 2021.

In a letter dated 29-December, sent to MAA as well as recond dealers association PEKEMA, the Ministry of Finance confirms that all locally-assembled (CKD) passenger cars, including SUV and MPVs, (but not commercial vehicles like pick-up trucks) will continue to be exempted from paying the 10 percent sales tax until 30-June 2021.

Meanwhile, imported (CBU) new and reconditioned cars can continue paying sales tax at only half the normal rate (5%), also until 30-June 2021.

The U-turn, although is viewed as a positive one for consumers, will see many car companies scrambling for a response. Many finance, sales, and marketing staff at car companies will see their annual leaves cancelled or made redundant, as they will most likely to have to work through the holidays to readjust their plans.

The announcement could affect some recently launched imported cars too, like the Toyota GR YarisBMW M3 and BMW M4, as these cars were launched/opened for booking with the understanding that deliveries can only be made in 2021, and thus will have to pay the full 10 percent sales tax, as per the Ministry's directive then.

All price lists for 2021 models will have to be recalled and replaced, so please be patient if your local car dealer is unable to give you a clear answer at the moment.


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