The Ministry of Finance Malaysia through a late evening television broadcast has announced that the sales and service tax (SST) exemptions period that was set to expire on 30th of June 2021, will be extended to the 31st December 2021.

This is the second six-month extension given to spur the economy, as the return to the full quantum of taxation was scheduled to begin on Jan 1st 2021, but an extension was notified only days before the end of 2020.

As such, all locally-assembled (CKD) passenger cars, including SUV and MPVs will continue to be completely exempted from the 10% sales tax, while imported passenger cars will still enjoy a cut from 10% to 5% in SST.

Commercial vehicles such as pick-up trucks and panel vans remain excluded from the SST exemption exercise.

The sales tax exemption period is part of the government’s short-term economic recovery plan (from Penjana moniker in 2020 to Pemerkasaan in 2021), designed to spur the demand in the automotive market, which have been impacted by the Covid-19 health pandemic.

The late evening television broadcast by Prime Minister Tan Sri Muhyiddin Yassin was part of the government’s financial plan announcement for MCO 3.0, which will enter its first phase with full lockdown in the first 14 days of June. Only selected economic and services sectors deemed essential are allowed to operate at reduced capacities and hours.  

Workshops for maintenance and repairs continue to open and operate, but car sales and distribution, as well as car wash centres, are not allowed.