Transport Minister Datuk Seri Wee Ka Siong said the decision to extend the automotive sales and service tax (SST) exemption scheme lies with the Finance Ministry.
Wee said although the exemption is beneficial to the automotive industry, the decision is up to the other ministry.
He said he would meet to discuss the matter with Finance Minister Tengku Datuk Seri Zafrul Tengku Aziz.
“When we were faced with the Covid-19 pandemic, the government decided to implement the SST exemption.
“As a result, the automotive market – especially second hand car businesses – were able to remain viable. Otherwise, it would have been difficult for the dealers to survive in the pandemic.
“The incentive has helped to boost the economic sector and our recovery. The Transport Ministry is able to see through the transactions at the Road Transport Department.
“However, we need to consider the country’s financial capabilities. For that, I will leave it to the discretion of the Finance Ministry.”
The exemption was introduced to mitigate the effects of the first Covid-19 Movement Control Order. It was implemented as part of the Penjana stimulus package and came into effect in March 2020.
Originally scheduled to end on Dec 31, 2020, the SST exemption has been extended thrice. The first extension was to June 30, 2021, and then to Dec 31, 2021. The current SST exemption for new vehicles is set to come to an end on June 30. It was announced during the tabling of Budget 2022.
MAA seeks further extension of SST exemption
The Malaysian Automotive Association (MAA) has previously appealed to the government to extend the SST for another 6 months.
President Datuk Aishah Ahmad said the SST is not fair to the carmakers. She added that they are in short microchip supply due to the Covid-19 restrictions.
She said the carmakers’ backlog of orders stretches up to six months, on the back of a shortage of spare parts and raw materials to produce the parts due to the pandemic.
Other than that, she said the demand for Electric Vehicles (EV) has improved since the government announced the Zero Import Duties. This is as well as a Sales Tax Zero for Completely Knocked Down (CKD) and 50% for Completely Built-Up (CBU) vehicles.
“I think in 2020, the government changed the division of the open market value to say that other than manufacturing costs will be included in the calculation of excise duty. If that happens, the car prices OTR will increase from 8% to 20%”.
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