What sales tax exemption is the government offering the auto sector?

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Government Offers 100 Per Cent Sales Tax Exemption on Locally Assembled Vehicles

The Malaysian government is providing a full 100 per cent sales tax exemption specifically for locally assembled vehicles. This exemption applies to the manufacturing price of these vehicles, with a standard 10 per cent tax rate for vehicles generally. This initiative aims to provide some relief to the automotive sector, which has faced significant challenges due to the economic impact of the Covid-19 pandemic.
Exemption Details for Locally Assembled Cars

For locally assembled vehicles, the sales tax exemption is applied directly to the factory price. This means that the listed manufacturing cost is reduced by the amount of the sales tax. The exemption is capped at the factory price and does not extend to the final on-the-road price, which includes other charges like registration and insurance.
Financial Impact on Consumers: Perodua MyVi Example

The impact of this exemption on consumer pricing can be illustrated with an example. A locally assembled Perodua MyVi 1.3g, which originally carried a price tag of RM44,590, sees a reduction to RM43,029 after the sales tax exemption. This translates to a saving of RM1,561, representing a 3.5 per cent decrease in price for the buyer.
Financial Impact on Consumers: Imported Mercedes Benz Example

Even for imported vehicles, a form of tax relief is available, though the structure differs. An imported Mercedes Benz, with an original price of RM658,888, benefits from a tax adjustment that brings its price down to RM646,626. This reduction amounts to RM12,262, or 1.6 per cent of the original price, demonstrating that while exemptions are primarily for local assembly, pricing adjustments are being made across segments.

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What sales tax exemption is the government offering the auto sector?

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