Only components for CKD cars are SST exempt, finished product to have sales tax – customs

Only components for CKD cars are SST exempt, finished product to have sales tax – customs

The Royal Malaysian Customs Department has issued a statement clarifying reports on cars being exempt from sales tax (SST). The goods that are exempt from SST are components for CKD assembly, and not the CKD cars themselves. The finished product, which is the car, is liable for SST.

“Customs would like to explain that passenger cars have always been in the plan for sales tax. However, some parties have misinterpreted the list (list of SST exempted goods that was released today) that was released without referring to Customs,” said director-general Datuk Seri Datuk Subromaniam Tholasy.

“Items that are exempted from sales tax in the list refers to components that are used for the assembly of completely knocked down (CKD) passenger cars. When the vehicle made from the imported CKD components is finished, the finished vehicle is liable to sales tax. With this explanation, Customs hope that the issue is closed and does not confuse the rakyat and consumers,” Subromaniam added.

The clarification by the Customs follows reports that cars will be exempt from SST once the new tax system kicks in from September 1, first reported by Malaysiakini. Now, with the matter clarified, it’s likely that we will see higher car prices come September 1, after factoring in SST, as expected.

However, the SST rate is yet to be finalised. Yesterday, finance minister Lim Guan Eng said that there will also be two different rates of 5% and 10% for sales tax, which is applicable to selected manufactured and imported products. He added that details will be announced when the new SST Bill is tabled in parliament next month.

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Danny Tan

Danny Tan loves driving as much as he loves a certain herbal meat soup, and sweet engine music as much as drum beats. He has been in the auto industry since 2006, previously filling the pages of two motoring magazines before joining this website. Enjoys detailing the experience more than the technical details.

 

Comments

  • Semi-Value (Member) on Jul 19, 2018 at 5:47 pm

    lol esok time to rush and buy car

    Like or Dislike: Thumb up 21 Thumb down 1
    • Double Tax Is Haram on Jul 19, 2018 at 7:25 pm

      Cars already taxed on excise duty, now tax again on SST. This is double taxation! If include the car loan financing interest charges its triple tax!

      Don’t know why govt so crazy to tax highly cruelly on cars but not on expensive handbags as luxury tax!

      Like or Dislike: Thumb up 37 Thumb down 7
      • Slightly Higher Can La on Jul 19, 2018 at 9:15 pm

        Not affected la. Not everyday buy also mah

        Like or Dislike: Thumb up 6 Thumb down 2
      • Matchy on Jul 20, 2018 at 8:51 am

        Excise duty is not tax…

        Like or Dislike: Thumb up 6 Thumb down 1
      • baby's on Jul 20, 2018 at 8:56 am

        Because car itself is a luxury, not a necessity. No money then ride motorcycle or bicycle or public transport

        Like or Dislike: Thumb up 4 Thumb down 5
  • John May 9 Nangis on Jul 19, 2018 at 5:51 pm

    Nevermind people misunderstood. The car will still be cheaper because all the parts for CKD will not have SST

    So, the final product will be cheaper, and eventhough the final product gets SST, still will be cheaper than before cause all the CKD parts got no SST

    Honda and Toyota and Nissan can still make a car far cheaper than 4 months ago

    What great news still!!!

    Like or Dislike: Thumb up 10 Thumb down 108
    • Vince on Jul 19, 2018 at 6:14 pm

      Well, thats is really not the case, apparently , based on old SST previously , CKD parts are already on exempted list. Therefore no sales tax then. Only 10% Sales tax on the completed car.

      With GST, car manufacturer claim their input tax, therefore the GST is not a cost to them. Only GST on the completed car charge to the buyer at 6%

      Car will be more expensive just due to the different in rates between GST and SST alone. Unless the car manufacturer reduce their margin to maintain prices, however SST Tax paid on car will definitely be higher in GST. So if you plan to change car better do it before 1st Sept 2018

      Well-loved. Like or Dislike: Thumb up 74 Thumb down 1
    • Dong gor on Jul 19, 2018 at 6:36 pm

      Not really. Previous system has also exempted Ckd parts from sst / gst. So the base price is not lowered.

      Well-loved. Like or Dislike: Thumb up 50 Thumb down 0
    • Hahahahahaha!

      Like or Dislike: Thumb up 43 Thumb down 5
    • Rajoo Selvam on Jul 19, 2018 at 9:33 pm

      Malaysians cannot go on with such high prices. About time Government instruct all car companies to reduce car prices by 30% as promised by the BN Government.

      I am sure even reducing 30%, they will still make profit because their profit margins are the highest in the world amongst all car companies.

      Government also can collect SST on our cars, no problem. But pls reduce car prices by 30%

      Like or Dislike: Thumb up 4 Thumb down 15
  • Dark_Knight on Jul 19, 2018 at 5:51 pm

    SEE…………As i told you all

    Like or Dislike: Thumb up 42 Thumb down 9
  • Woot Woot on Jul 19, 2018 at 5:55 pm

    Thanks but no thanks for the two hours short-lived joy Mr Customs DG

    Like or Dislike: Thumb up 33 Thumb down 0
  • Tier 1 on Jul 19, 2018 at 6:08 pm

    There is still a chance of cheaper vehicles post SST. All components imported by local OEMs using CJ5 import duty exemption. With Sales tax also exempted for CKD components, it will also contribute to cheaper price. Hence lower BOM cost and finally factored in SST on the completely assembled vehicle. Customer only pay once e.g. one layer of tax unlike GST. I don’t think it will be more than 2 or 3% price increase. So SST still beats GST!

    Like or Dislike: Thumb up 6 Thumb down 36
  • Fast Jerk Guy on Jul 19, 2018 at 6:40 pm

    Walaueh, 1st Sep want launch new tax system, next month only tell in details?

    Like or Dislike: Thumb up 27 Thumb down 0
  • Johorean on Jul 19, 2018 at 6:45 pm

    Don’t worry. If Malaysian want cheaper cars, the most important thing here is MITI must urge all CKD car manufacturers to revise their Nett Selling Price before excise duty and sales tax so the final OTR price without insurance can be reduced.

    Like or Dislike: Thumb up 8 Thumb down 8
  • Anonymous on Jul 19, 2018 at 6:52 pm

    So much for that… like they say… pi mai pi mai tang tu jugok..!

    Like or Dislike: Thumb up 30 Thumb down 0
  • C.P. MOHAN on Jul 19, 2018 at 7:21 pm

    i would risk waiting for incentives e.g maintaining the same price during the ‘tax holiday’ the difference with SST is tax claimable.

    Like or Dislike: Thumb up 1 Thumb down 1
  • Sonyman on Jul 19, 2018 at 7:32 pm

    Like that ah. So dam cold the water they splash

    Like or Dislike: Thumb up 21 Thumb down 0
  • Ahmadjr on Jul 19, 2018 at 7:59 pm

    Bukan dia ni ke yang kata kat maslan gst boleh menurunkan harga barang? Sampai ke sudah kawan tu percaya

    Like or Dislike: Thumb up 16 Thumb down 0
  • Dear PT, considering that this article effectively rescinds the previous one, might as well remove the previous article altogether since that news was full of half truths sourced from a website known for half truths.

    Like or Dislike: Thumb up 9 Thumb down 1
  • This is gonna be super confusing….good job to the new Govt.

    Like or Dislike: Thumb up 5 Thumb down 1
  • Leafable on Jul 20, 2018 at 10:27 am

    I don’t might paying GST/VAT/SST/whatever other T.
    But what killing ordinary Malaysian is the EXCISE DUTY and IMPORT DUTY are the BIGGEST “T”. If they truly want us to support PH they need to either reduce these 2 taxes or abolishing it completely.

    Like or Dislike: Thumb up 9 Thumb down 0
  • Concerned Consumer on Jul 24, 2018 at 12:39 pm

    In this instance, BN or PH, sama saja.

    They still charging the same crazy excise and import duties on cars. Perhaps its Tun favourite things to do.

    However we all hope collectively, PH will come to its sense. Stop old practice of burdening rakyat with unjustified taxation / duties . Review and reduce both duties to reasonable level.

    Beside the Government need to reduce & eliminate dependency of earning from ‘unnatural cause’.

    Earning from exorbitant excise & import duties on cars is akin to drug addiction. Reduce and Stop the addiction, please.

    Effectively, Malaysia do not have a national car already. So since the ‘official reason’ for imposing exorbitant excise and import duty (as trade barrier / protection to shield national car) no longer there, its high time to review & reduce those duties.

    Like or Dislike: Thumb up 2 Thumb down 0
 

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