Zafrul: 4 Months Left For SST Discount, No More Extension

Prospective car buyers in Malaysia have just four months remaining to take advantage of the ongoing SST exemption/discount for new vehicles, which ends on June 30th, 2022. They're super serious about it this time; no more extensions.

Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz reiterated the narrowing window late last week while presenting the Laporan Kewangan Rakyat (basically a renamed 86th LAKSANA report published by the MOF on a weekly basis since April 2020).

First implemented in June 2020 to spur economic recovery and uptake of new car sales in the midst of a disruptive pandemic, the SST exemption delivers a 100% sales tax discount on locally assembled (CKD) passenger cars while a 50% sales tax discount is given to ones that are fully imported (CBU).

With 2 years of cheaper new car prices across the board, Malaysians have responded with consistently high demand resulting in strong sales performance that would have suffered greatly otherwise, given the circumstances.

According to MAA data, a total of 529,514 vehicles were sold in 2020 which was a significant, but not catastrophic, decrease from the 604,281 vehicles sold in 2019. However, because of more time spent in lockdown (MCO), 2021 proved to be a worse performer for the local automotive market with 508,911 cars sold (a 3.9% drop) despite the year being one of consolidation and recovery.

MOF has not disclosed how much sales tax revenue would have made it to government coffers had  SST not been slashed since mid-2020, but we might get a more solid figure on that once the exemption/discount period ends. Four months isn’t a terribly long time, after all, but has to be multiple billions of Ringgit.

Still, despite a sweeping return of SST to new cars, electric vehicle buyers will be able to enjoy new zero-emissions cars at near tax-free prices and even be exempt from paying annual road tax until 2025.

In 2022 alone there will be a surge of new EV models offered by both premium and mass-market automakers to take advantage of these new incentives. With new electric models being rolled out by automakers internationally, their ubiquity in local showrooms is likely to compound again in 2023 and beyond.