Should import duties on solar panels be waived for Budget 2023?

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Import Duties on Solar Panels Should Be Waived for Budget 2023

Clean energy specialists have proposed that the government waive import duties on solar panels and inverters in Budget 2023 to accelerate renewable energy adoption and support Malaysia's net-zero targets by 2050. The current 10 per cent sales and services tax (SST) on imported solar components increases upfront costs for consumers. Emulating the United States' two-year tax waiver on solar panel imports from several Asian countries could stimulate Malaysia's renewable energy sector.
Waiving Import Duties and SST to Reduce Consumer Costs

The import of solar panels and inverters is subject to a 10 per cent sales and services tax (SST), which is ultimately borne by the consumer. Removing these duties and taxes would directly lower the initial investment required for solar installations, making renewable energy more accessible and affordable for both individuals and businesses. This aligns with the goal of propelling Malaysia towards its net zero emissions target by 2050.
International Precedents for Tax Waivers

The United States has implemented a tax waiver on solar panel imports from countries including Malaysia for up to two years. This measure aims to ensure a sufficient supply of resources for power generation and potentially drive growth among American solar players. Malaysia could adopt a similar strategy to provide a significant boost to its domestic renewable energy industry.
Broader Tax Incentives for Renewable Energy Adoption

Beyond import duties, there are calls for enhanced tax incentives to encourage broader adoption of renewable energy technologies. Solarvest Holdings Bhd advocates for financial subsidies on battery energy storage systems (BESS), such as waivers on SST, import, and excise duties, alongside incentives like the Green Investment Tax Allowance (GITA) and Green Income Tax Exemption (GITE). GITA provides an allowance on qualifying capital expenditure for green projects, while GITE offers a tax exemption for green service providers.
Extending and Expanding Existing Incentives

Specialists also propose extending existing incentives like GITA and GITE beyond their current expiry, which is 2023. Furthermore, an increase in the GITE cap from 30 megawatts (MW) to 80MW per company, along with an expansion in the number of companies eligible for GITE, has been suggested. Maintaining the incentives for the Sustainable Energy Development Authority’s (SEDA) net energy metering (NEM) 3.0 scheme is also a priority, with a call to make the export rate for the NEM Net Offset Virtual Aggregation (NOVA) more attractive for commercial and industrial users, similar to the 1:1 rate offered under NEM Gomen and NEM Rakyat.

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Should import duties on solar panels be waived for Budget 2023?

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