Do you know that Malaysia is known for having one of the world’s highest taxes on cars? In terms of import and excise duties collection, the sales of new cars and spare parts for motor vehicles are the single largest contributor, even exceeding those of tobacco and alcohol products!
Based on statistical data, the automotive sector alone has contributed well over RM 10 billion in taxes every year! In the Fiscal Outlook and Federal Government Revenue Estimates 2020 document, the Ministry of Finance’s (MoF) mentioned that excise duties collection in 2020 is expected to increase by 4.9% to RM 11 billion due to higher demand for motor vehicles!
You must have wondered: How much exactly have I been paying as taxes for the car I bought? In Malaysia, sales tax for vehicles has been set at 10% for both locally assembled and imported cars. This sales tax exemption on purchases of new vehicles was previously granted from 15th June 2020 until 31st December 2020, and was further extended by another 6 months to 30 June 2021 by the MoF as an incentive to spur car sales at a time when the industry is contending with the impact of the Covid-19 pandemic.
On top of sales tax, depending on the car and its engine capacity, excise duty is levied between 60% and 105%. On the other hand, import duty can reach up to 30%, depending on the vehicle’s country of manufacture. Fortunately, vehicles from ASEAN countries are not imposed with import duty!
Here is a quick look at the motor vehicle import and excise duty structure for Malaysia:
Note: CBU stands for Completely-Built Up