Indirect Tax Alert
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Issue No. 48/2024 | 30 December 2024
Extension of Full Excise Duty Exemption on Non-Manufacturing Costs of Locally Assembled Vehicles
We understand that the Ministry of Finance (MOF) had recently replied to the Malaysia Automotive Association (MAA) and approved the application from MAA to extend the full excise duty exemption on the non-manufacturing costs of locally assembled vehicles. The extension granted by MOF is for one year only and the exemption will be available until 31 December 2025.
When the Excise (Determination of Value of Locally Manufactured Goods for the Purpose of Levying Excise Duty) Regulations 2019 was issued on 31 December 2019, the scope of excise duty on locally assembled vehicles was expanded to include non-manufacturing costs such as sales costs, general & administrative expenses and profit. It was originally intended for the regulations to come into operation on 1 January 2020. However, due to the COVID-19 pandemic, MOF had deferred the full implementation of the regulations to 2021 by granting full exemption on the non-manufacturing costs of locally assembled vehicles for one year. The exemption was subsequently extended for a 2-year period twice, first until 31 December 2022, and then another time until 31 December 2024.
PwC Comment
We understand that MOF has indicated that the one-year extension of the exemption is the final extension and no further extension will be granted after that.
Manufacturers of locally assembled vehicles who wish to continue enjoying the current exemption must ensure that they comply with the requirements of submitting the detailed information required by the relevant authorities. Compiling and preparing the detailed information required by the authorities can be challenging especially when one is not familiar with interpreting the relevant terms and excise duty legislation.
If you think your business is affected or may be affected by the above change or if you need any clarification or assistance, please do not hesitate to contact us and we would be happy to assist you.
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