Tax-free EVs? MAA clarifies condition of Sales Tax exemption for EVs in Malaysia

Hans · Jan 20, 2022 12:24 PM

Tax-free EVs? MAA clarifies condition of Sales Tax exemption for EVs in Malaysia 01

Following the Ministry of Finance’s Budget 2022 announcement to exempt electric vehicles (EVs) from taxes, EVs are now generally referred to as tax-free.

In October 2021, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz’s Budget 2022 proposed for EVs (specifically, it’s battery electric vehicles or BEVs) to be made tax-free. Some buyers confused this to include sales tax.

Tax-free EVs? MAA clarifies condition of Sales Tax exemption for EVs in Malaysia 02

However, the Malaysia Automotive Association (MAA) has since clarified that the tax-free reference only refers to import and excise tax, and sales tax exemption only applies to CKD EVs. The latter is not relevant at the moment because there are no CKD EVs on sale in Malaysia.

The 10 percent sales tax still remain for imported (CBU) vehicles, EVs included, although this has been temporarily reduced by half for CBU passenger cars as part of the government’s economic stimulus package.

Tax-free EVs? MAA clarifies condition of Sales Tax exemption for EVs in Malaysia 01

“There’s no import duty and excise duty as well as sales tax for CKD (electric) vehicles. As for CBU, there’s no import duty and excise duty, but you have to pay sales tax. But right now because of the Penjana (later succeeded by Pemerkasa+) package, you only pay 50 percent of the sales tax for EVs, until 30-June 2022,” said MAA President Datuk Aishah Ahmad.

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

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
1-Jan 2022 - 31-Dec 2023 (tbc)
Personal income tax Up to RM 2.5k rebate for expenses on BEV charging hardware / services

Total new vehicle sales in Malaysia for 2021 reached 508,911 units, a 4 percent drop from 2020, which MAA says is commendable considering the challenges faced last year – FMCO due to Covid-19 as well as semiconductor parts shortage.

MAA also said that there were 274 units of new EVs registered last year. The figure does not include parallel imported units.

Also read: How many EVs are there on Malaysia roads? Slightly under 500, which brand leads?

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.

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