The current sales tax (SST) exemption for new vehicles is set to come to an end on June 30, and it is not known if there will be another extension to the scheme, despite requests to do so. Last month, the Malaysian Automotive Association (MAA) said it had appealed to the finance ministry to extend the SST exemption, but said it had not received any feedback on the matter.
Now, transport minister Datuk Seri Wee Ka Siong has offered his views on the matter, as The Star reports. In a Q&A session following the launch of the ACO Tech ATLAS automotive ecosystem yesterday, he said that he viewed the exemption as a benefit for the automotive industry.
However, he understood that the finance ministry would have its own financial considerations to make, and as such, he explained that the decision on whether to continue with the scheme would be up to the finance ministry.
He said the sales tax exemption of 100% for locally-assembled (CKD) cars and 50% for fully-imported (CBU) cars had helped the industry deal with the Covid-19 pandemic. With it in place, he said that “the automotive market was able to remain viable. Otherwise, it would have been difficult for dealers to survive during the pandemic,” he said.
“The incentive has helped to boost the economic sector and our recovery, and the transport ministry is able to see this through the transactions at the road transport department (JPJ). However, we need to consider the country’s financial capabilities and for that, I will leave it to the discretion of the finance ministry,” he said.
Wee said he would be sharing his thoughts with finance minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz. “I will discuss this when I meet him soon. As the transport minister, I feel the exemption scheme has been a boon for businesses and car dealers. They were able to maintain their businesses and did not have to resort to getting rid of workers,” he said
“But whatever decision made by the finance ministry will be supported by the transport ministry, as we are part of the same government. It is a collective decision and responsibility,” he added.
The SST exemption was first announced in June 5, 2020 as part of the Penjana stimulus package to mitigate the effects of the first movement control order, which took place from March that year. Originally scheduled to end on December 31 that year, the SST exemption was extended at the last moment to June 30, 2021, and then again to December 31, 2021. A third extension, which is the current one, was announced during the tabling of Budget 2022.