Government Reverses Excise Duty Hike For 1.5-litre MPVs

Following backlash from vehicle manufacturers and the public alike, the Malaysian Customs have reversed its earlier decision to raise excise duties of MPVs with engine capacities or 1.5-litre or less, from 60 to 65 percent.

The reversal will take effect from 13 April. In the meantime, the Customs department will put in place processes to waive the additional duties owed by vehicle manufactures/distributors.

Earlier last week, Customs have had raised excise duties for MPVs below 1,500cc by 5 percent, effective 1-April 2017. This then resulted in an increase in prices of Toyota Avanza, Rush and Sienta by between RM3,000 to RM6,000.

In a statement to the press issued late yesterday evening, Dato' Indera Subromaniam, Director General of Customs Malaysia explained that the earlier move to restructure excise duty for MPVs was due to complications that arose when migrating its Harmonised Tariff Codes from the previous 9 digit format to a new 10 digit format to comply to the World Customs Organisation’s (WCO) Harmonised Tariff Nomenclature.

In the past, there were distinctions between 4x4 and 4x2 MPVs with engine capacities 1,500cc or less, with excise duties set at 65 percent and 60 percent respectively. The two categories’ HS codes have since been merged into one, and in doing so, it was only logical, in the eyes of taxation, to harmonize the rates to the higher 65 percent, as the adopting the reverse would simply allow 4x4 variants an unfair advantage over the supposedly cheaper 4x2 variants.

Of course, there are no 4WD 1.5-litre MPVs on sale today but such models do exist elsewhere and Customs officers have to ensure that their policies are future-proof against possible new products.

Carlist.my understands that UMW Toyota is in the process of reversing its earlier announced price hike for the Avanza, Rush and Sienta.