The authorities have made a U-turn on the increase in excise duty for budget MPVs. The excise duty rate for MPVs, SUVs and pick-ups below 1,500cc was increased from 60% to 65% in the “Excise Duties Order 2017”, but the rate will now go back to 60% with immediate effect.

In a press statement yesterday, the Royal Malaysian Customs Department said the decision to reverse the excise duty hike was made after taking into account the high demand for such vehicles.

“The new excise duty rates have impacted CBU imported vehicles compared to CKD locally assembled ones. Taking into account the fact that consumer demand for these CBU imports is still high, the government has agreed to readjust the excise duty rate for vehicles under tariff codes 8703.22 9010 and 8703.22 9090 to 60% effective immediately,” said Customs director-general Datuk Indera Subromaniam Tholasy.

Toyota was the first to respond to the excise duty hike; prices should go back to pre-revision levels now

“Retail prices must be maintained and vehicle manufacturers cannot raise the prices based on the increase in excise duty rate which have been gazetted through the Excise Duty Order 2017 on March 31,” he added.

With this announcement, we’re expecting prices of 1.5L MPVs from UMW Toyota Motor (UMWT) – namely the Toyota Sienta, Avanza and Rush – to return to pre-revision levels. UMWT was the first to respond to the Customs move, and raised prices by up to RM6,000. The Perodua Alza, Proton Ertiga and Honda BR-V would have also been affected, but the three carmakers were silent on the matter, so it’s status quo.

UPDATE: Prices for the three Toyota models have reverted to original levels, as shown on its website.

The original increase to 65% came about because of the streamlining of product category codes in the system, and the merger of tariff codes in the “Harmonised Tariff Nomenclature” gave the opportunity to revise rates. Customs points out that the passenger car rate is 75%, excise duty for SUVs below 1,500 cc was revised from 75% to 65%, and that the 60% to 65% jump was not to increase revenue, but to find a mid-point between 60% and 75%.