Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz noted that 868,422 vehicles have been sold during the exemption period, enabling RM4.7 billion in tax savings. — Bernama pic
By Zarrah Morden
Monday, 20 Jun 2022 3:14 PM MYT
KUALA LUMPUR, June 20 — The federal government will not be extending the sales and service tax (SST) exemption for the purchase of new vehicles past June 30.
However, Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz who made the announcement today noted that some 264,000 units have yet to be supplied to buyers due to disruptions in the global supply chain.
“In order to allow those who have placed orders for new vehicles to benefit from the SST exemption, the registration of new vehicles with the Road Transport Department Malaysia has been given an extension until March 31, 2023,” he said in a statement this afternoon.
“The extension of the vehicle registration period is a midpoint solution to balance the interests of consumers and national tax revenue that needs to be increased post-pandemic to ensure the welfare of the people and the country’s economic well-being continue to be preserved,” he added.
The minister noted that 868,422 vehicles have been sold during the exemption period, enabling RM4.7 billion in tax savings.
The SST exemption for vehicles was introduced in June 2020 under the Penjana programme, in order to spur demand within the local automotive industry.
It was originally supposed to end on December 31, 2020 but an extension was granted until end of this month.
“With the reopening of economic sectors, the automotive sector has returned to operating as usual,” Tengku Zafrul said, seemingly to explain the government’s reason to maintain the June 30 expiry for the exemption despite market expectations.
Last week, RAM Ratings Services Bhd ratings specialist Ben Inn expressed hopes that the government would extend the SST exemption period in its current form or at reduced rates as demand was expected to drop after the expiry of the programme.
“Consumers’ demand for cars will also be dampened by higher inflation, concern on the economy, tighter financing and higher cost of car ownership from rising interest rate and fuel subsidy rationalisation.
“All things considered, we believe total industry volume of 600,000 units in 2022 is possible, however, (it is) dependent on the availability of critical parts and foreign workers,” Inn was quoted saying by national news agency Bernama.
In January, the Malaysian Automotive Association forecasted a growth of 17.9 per cent in total industry volume to 600,000 units in 2022 from 508,9111 in 2021.