The big news for the Malaysian auto industry this year is the tax exemption for electric vehicles (EVs), announced in Budget 2022.
As a first push for EVs in Malaysia, it was proposed that they will be completely exempt from import duty, excise duty and sales tax. The battery-powered cars will also enjoy road tax exemption, and there will be an income tax relief of up to RM2,500 for EV charging, whether you’re buying and installing one or subscribing to a plan. The duty exemption for CBU imported EVs will be in place till December 31, 2023 – a two-year window.
Now, while the Budget 2022 presentation clearly said that sales tax is also exempted, the actual text that detailed the proposal said that only import and excise duty are to be exempted. Those two duties are much bigger components in car pricing than sales tax, but there was some confusion on whether SST is included or exempted.
We now know that sales tax is not part of the package, as confirmed by the Malaysian Automotive Association (MAA) in a virtual press conference last week. CBU EVs enjoy waived import and excise duties, but SST still applies, and that’s currently at a 50% rate for all imported cars (at present, all EVs are imported). This isn’t EV-specific – as you would already know, all passenger vehicles are currently enjoying 100% SST exemption for CKD locally assembled models, or 50% for imports.
For an EV to be truly tax-free, it has to be locally assembled. CKD EVs will get the full import and excise duty exemption, plus full SST waiver till the end of 2025.
So, if you’re one of those eagle eyes wondering why the new “2022 tax-free” pricing for EVs doesn’t match the true duty-free prices of Langkawi, it’s because of sales tax on the 2022 Peninsular Malaysia prices. Let’s take a look at some examples.
The MINI Cooper SE facelift was launched here in June 2021, then priced from RM213,461 on-the-road without insurance (with BMW Malaysia’s base two-year warranty). Then, the Langkawi price was RM168,790. A new 2022 tax-free price came out earlier this month and the electric MINI is now yours for RM178,241. That doesn’t match the 2021 Langkawi price, and it’s down to SST, which is 5% (50% off from the standard 10% rate for cars), but hey, it’s still RM35,000 cheaper than what it was last year.
The BMW iX3 was launched here in October 2021, with a Peninsular Malaysia price of RM317,360 for the entry Inspiring trim level. Then, BMW published prices with SST as they anticipated deliveries in 2022, and that was before SST exemption was extended to June 30 this year. The 2021 Langkawi price was RM270,360.
The new 2022 tax-free price for the iX3 Inspiring is from RM307,160. We’re told that 2022 pricing for the iX3 is quoted with the full 10% SST, as the first batch has been fully sold and the second batch will arrive after June, which is when the current round of SST exemptions expire.
Ditto the BMW iX, which was launched here in August 2021. Then, the xDrive40 started at RM419,630, while the Langkawi price was a mere RM313,630. We called the duty-paid mainland price for the electric SUV a bargain back then, and it’s even more of a steal now – 2022 tax-free pricing for the iX starts from RM361,430, which is RM58,200 lower. Once again, it doesn’t match 2021 Langkawi prices due to sales tax.
But those with a calculator handy would have figured out that the addition of SST alone will not account for the full difference in price. The iX’s 2022 RRP is RM47,800 higher than in duty-free Langkawi, which is a fair bit more than 10%.
There isn’t an official explanation for this discrepancy, but perhaps BMW Malaysia had initially priced the iX extremely keenly with slim margins as part of its i sub-brand market reintroduction plan, expecting to sell just a handful of units. Bear in mind that this was before the big Budget 2022 announcement. Now that the import and excise duty exemptions are in place, prospects for the iX, and other EVs, have changed drastically.
In any case, as we’ve established before, the iX was a bargain in Malaysia, and it’s even more of a steal now. Its “true price” of RM313k is over RM100k cheaper (around 25% less) than an X5 xDrive45e PHEV (which is CKD locally assembled, while the iX is CBU), whereas in most other markets, the two SUVs have near identical prices. All relative of course, and a bargain for what it is does not mean it’s cheap.
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ppl need to be woke. ev cars arent affordable for most of the ppl.
Cars aren’t affordable for most Malaysians except for a select few. That’s why Axia, Saga, Myvi thrive. Our archaic excise duty system needs to go.
Funny you should say that bro when preCovid ours is the leading market in Asean for luxury passenger cars.
Copy paste: “Until the prices are affordable to the masses and crystal clear as to the actual tax structure,forget about any purchase.
These Evs are affordable to the rich.The average Ah Kow and Ahmad and Kurusamy will not be the target market.”
Many Langkawi registered supercars running around PWTC KL,
Their owners’ HQ is only nearby…
Good job mrDanny, fully respect, u r the only one, speak the truth. Now the answer is only 2:- (1)either the Govt is cheating rakyat on 100% tax/futy free or (2)seller is cheating us with markup price.
Do the same to greedy merz, bcoz the merz is even higher what price tag we can see online at others country.
Regardless, EV is a scam on the world when electricity generation are heavily using fossil fuel or nukes, EV production are hazardous and not carbon neutral, charging is more expensive per KM compared to petrol/diesel, replacement of batteries are killer and disposal are an environmental concern.
Exactly.. EV is more hazardous because of it’s battery disposal. Just imagine how are we (human) going to dispose the end-of-life batteries safely? We are not talking for few but tons. Battery is not sustainable resource though.
Yeah, and so now humanity’s only hope for the future of personal transportation is to go back to driving horse drawn carriages and riding horses, right?
why not? if it can save the world from pollution.
yikes, malaysia is going to be littered with too much horse’s shit if that’s what you want
Do read: “..For an EV to be truly tax-free, it has to be locally assembled. CKD EVs will get the full import and excise duty exemption, plus full SST waiver till the end of 2025…”
So it is not that Govt is cheating rakyat, but brandholders will have to make extra effort if they want to give fully tax free, such as BMW Malaysia to CKD iX cars here. It is a win-win for both as buyers will get them cheaper and it help our economy with jobs generation.
1. Manufacturers should standardize battery pack so that users can exchange battery pack at “petrol” station rather than waiting for hours to be charged.
2. EV should be made affordable to the market, not by adding luxurious features for the rich.
3. To make it greener we need more people to switch to EV than using petrol, not just from the small group of the rich.
You are right,Semi V…
Until the prices are affordable to the masses and crystal clear as to the actual tax structure,forget about any purchase.
These Evs are affordable to the rich.The average Ah Kow and Ahmad and Kurusamy will not be the target market.
It’s in the margins. They wanna make more money out of what they are selling. It’s a business after all, not some charity.
Most probably the car dealers are keeping some form of profit..in order to keep their 2021 stocks seems reasonable pre owned prices