Sales of new vehicles will not require payment of Sales Tax this year. For models that are assembled locally (CKD), the exemption will be 100% while for imported (CBU) models, the exemption will be 50%.
These are incentives which the Prime Minister today announced as part of the Short-Term Economic Recovery Plan. The plan has 40 iniatives totalling RM35 billion and the tax exemptions for the auto industry are for the period from June 15 until December 31, 2020.
Sales tax is set at 10% so purchasers of locally-assembled models will not have to pay that entire amount, while those who buy CBU models will have to pay half of the sales tax that would be payable. The revisions should be quite straightforward although the car companies will now have to accept that people will hold back their purchases for another 10 days.
Among the first in the industry to comment on the development, UMW Toyota Motor’s President, Ravindran K. said: “This is indeed good news for the auto industry and we are grateful to the government for assisting this sector. The full savings will be passed on to customers and we expect that the reduced prices will help to revitalize the automotive industry.”
Mr. Ravindran said that the company already has new models planned for launch this year. “With the tax exemptions, we will be making the relevant adjustments to the retail prices of all our models and apply them by June 15,” he added.
“The Malaysian auto industry, like those in other countries, has been greatly affected by the long period of inactivity during the Movement Control Order period. Apart from lost sales and production, there is also consumer sentiment which is uncertain of the future. Therefore, we appreciate the support from the government to help boost the industry,” said Akio Takeyama,
Deputy Chairman of UMW Toyota Motor.
The effects of the COVID-19 pandemic have been very hard on virtually every industrial sector, not just in Malaysia but also in other countries. As the situation eases, governments are now looking at ways to help industries recover as quickly as possible so the economy can be revitalized.
The auto sector in Malaysia is no exception and the shutdown will have implications on the Total Industry Volume in 2020. The Malaysian Automotive Association (MAA) has given a forecast of 400,000 units.
Keyword: Exemption of sales tax for new vehicle purchases, effective from June 15, 2020!