Driven_Web_Series_2014_Honda_City_vs_Toyota_Vios_vs_Nissan_Almera_003

The implementation of the Goods and Services Tax (GST) in April 2015 may not result in car prices going down, the Malaysian Automotive Association (MAA) has said, according to The Star.

“We are of the view that it is not correct to say that car prices will come down simply because the current 10% sales tax will be replaced by a 6% GST come April 1 next year,” MAA president Datuk Aishah Ahmad told the English-language daily.

“Under the GST system, there will be a different implication to businesses in various areas ranging from tax computation, collection, refunds, reconciliation and costing compared to the existing Sales and Service Tax regime.”

Unlike sales tax, GST is a transaction-based multi-stage tax imposed at each business transaction stage, the MAA said. “GST is levied on the supply of goods and services at each stage of the supply chain, from the supplier up to the retail stage of the distribution,” it said in a statement.

toyota-showroom

The association said that in the light of GST, vehicle distributors will need to review their entire cost structures and supply chain, besides assessing each and every one of their vendors and suppliers to determine their tax position. As such, those who have local assembly (CKD) operations will be affected most, it added.

Aishah also hopes for more clarity in areas concerning the motor trade, to help the car industry prepare for GST and give consumers a better idea of what to expect. She cited sales tax refunds as an important issue that should be resolved, preferably before year-end.

Last month, having conducted a price simulation, the Malaysia Automotive Institute (MAI) predicted that on average, new car prices will see 1-3% drops after GST is introduced, and for used cars, average price reductions of 5-10% yearly.

Budget 2015 in a couple of hours from now! Will there be any light shone on post-GST car prices, will tax exemptions for CKD hybrids and electric vehicles be extended beyond 2015, and will petrol and diesel be GST-ed? Stay tuned to paultan.org for updates!