Malaysian Government Lost RM4.89b In Excise Duty For Cars

The latest Auditor General’s Report 2018 revealed that between 2015 to 2017, the Malaysian government had given out RM4.89 billion worth of excise duty exemptions for locally-assembled vehicles, reports The Edge.

The duty exemptions were given mostly to energy-efficient vehicles (EEVs). A total of 73,250 EEV-compliant vehicles were sold during this period.

The so-called EEV category of cars was created under the previous National Automotive Policy, which granted certain levels of excise duty deductions/exemptions to low fuel consumption, locally-assembled cars.

The specifics of EEV criteria were not made public, but among the factors considered were investment value and fuel consumption (compared against the vehicle’s weight category).

From the RM4.89 billion worth of excise duty exemption in total, it is revealed that the exemption from three states namely Pahang, Kedah, and Selangor amounted to RM4.095 billion (83.75%) – all three states are host to several vehicle assembly plants.

Kedah (Kulim) is home to the Inokom plant, where BMW and Mazda vehicles are assembled. Pahang (Pekan) is home to Mercedes-Benz Malaysia’s vehicle assembly plant while Selangor (Rawang and Shah Alam) is where plants belonging to Perodua, Toyota, and Volvo are located.

On top of EEV incentives, the reduced tax earnings was also due to other exemptions given under the Returning Expert Program (REP) and Malaysia My Second Home (MM2H) program.

Comments in the Auditor General’s Report also suggests that EEV incentives are unlike to continue further.

"In the opinion of the audit, the rating of EEVs by JPJ (Road Transport Department) is based on the definition of UN R101, which has not been fully adopted, especially in relation to carbon emissions," said the report, which adds that the incentive needs to be reviewed.