Earlier this year, it was reported that the implementation of revised excise tax regulations under PU(A) 402/2019-Excise Tax Regulations (Determination of Value of Locally Produced Goods for Excise Tax Purposes), originally scheduled to come into effect at the start of the year, had been deferred to January 2026.
The implementation of the ‘402’, or open market value (OMV) excise duty revision, increases the scope of taxable items for CKD cars by including non-manufacturing costs such as sales, marketing, administrative expenses and profit, and as such is expected to push prices of CKD locally-assembled vehicles up. However, it remains to be seen by how much.
Initial reports indicated that CKD car/bike prices could go up by at least 10 to 30%, but in February the finance ministry firmly denied that that would be the case, stating that the vehicle valuation method was still being determined, and that there had yet to be a final decision on the matter.
With around five months to go before the OMV/402 kicks in, the question is whether it will be implemented as planned, and if so, what changes can be expected. The topic was broached to the Malaysian Automotive Association (MAA) during its 1H 2025 performance review briefing held earlier today.
According to MAA president Mohd Shamsor Mohd Zain, the OMV/402 will be implemented as planned, but a new method that will minimise its impact will be announced.
“We have had engagement with the ministry of finance, and understandably, the OMV is definitely going to be implemented, as that is part and parcel of the alignment to World Customs Organisation guidelines,” he said.
As to whether CKD car prices would likely go up by between 10-30% if based on the format that has been gazetted, Shamsor didn’t disagree with those numbers. “Yes, if the 402 impact is calculated based on the old format, there will definitely be a between 10 to 30% impact on the on-the-road (OTR) prices,” he said.
“However, based on feedback we have been getting, the indication is that there will be a new method or new way of calculation for the impact to be minimised. We are still waiting for brief to be made to us, hopefully very soon,” he said, adding that the association is hoping to get an update on the next steps as soon as possible.
This was because of concerns over the short period left before the OMV/402 kicks in. “With five months (left), it’s very short for any production to react. Where we are concerned, when we talk about the supply chain, we talk about all the impact on logistics and so on. We need at least six months minimum for existing changes to be made,” he explained.
To the question of whether the government has given a guarantee that prices are not going to go up as much as 10 to 30%, Shamsor said that nothing has been indicated in black and white. “But based on our engagement with them (MoF), they are saying that they are looking into possibly minimising the effects,” he said.
For a more detailed explanation on the OMV/402 topic, read our previous post.
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