In Cars, Local News / By Anthony Lim / 6 January 2020 10:19 am / 41 comments

The government says it is looking into a potential restructuring of import duties on cars, with both the finance ministry and the ministry of international trade and industry (MITI) involved in discussions, according to finance minister Lim Guan Eng.

Lim said that a joint committee comprising officials from both ministries – and chaired by the two ministers in charge – is studying the matter, The Malaysian Insight reports. “Car excise duties used to be under MITI, but now we have a joint committee that looks at not only investments but at duties and taxes. However, wait for a joint announcement to be made,” Lim said.

There was no intimation on the mechanics of the restructuring of duties and taxes, and whether it would result in cheaper cars on the whole. A year ago, MITI had said it might be looking at a reduction in excise duty for vehicles as a possible means to bring car prices down. It said that while such a move would result in less direct revenue for the government, it would be offset by improved tax collection from increased vehicle sales.

Deputy minister of international trade and industry Ong Kian Ming had said then that on the whole, this would benefit consumers, industry players as well as the government.

“Of course, there is a cost-benefit involved here, in the sense that you have more tax reduction in the excise duty. The government may collect less per unit, but whatever revenue lost by the finance ministry can be regained by the increase in the sales volume because car prices would be lower,” he said.

The original equipment manufacturers (OEMs) get to sell more cars, consumers get to benefit from lower car prices and the finance ministry gets to benefit as well, when it gets to collect more excise tax as a whole because of increased volumes. This is something we want to work towards for all car models,” he said.

Apart from the 10% sales and service tax, all vehicles are slapped with excise and import duty. Excise duty is between 60% and 105%, calculated based on the car and its engine capacity, while import duty can go as high as 30%, depending on the vehicle’s country of manufacture. However, vehicles built in ASEAN countries and Japan are not imposed with import duty.