Budget 2022: EVs fully tax-free and Sales Tax Exemption extended to June 2022

Here are some of the key areas that have been allocated funds under Budget 2022. At RM332 billion, this is also the largest ever budget allocation by the Malaysian government.

The biggest announcement for us auto fans is the announcement of the extension of the sales tax exemption for passenger cars to June 30th 2022. The criteria maintain, with completely knocked-down (CKD) models enjoying the full sales tax exemption that is 10% of the gazetted vehicle price, while models that are fully imported (CBU) continue to enjoy only half of the sales tax exemption.

Pick-up trucks, panel and window vans as well as lorries are classified as commercial vehicles, and as such, do not enjoy the sales tax exemption.

As for electric vehicles or EVs, the government has also proposed the full exemption of import duty (currently at 30%), excise duty (10%), sales tax and road tax (currently enjoying 50% discount) to promote the usage of zero-emission vehicles.

As such, expect to see some price changes to the MINI Cooper SE, Nissan Leaf, BMW iX models and the range Porsche Taycan models.

Under Budget 2022 that was tabled by Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz, the government is also proposing a personal income tax relief of up to RM2,500 to individuals for purchasing and assembly cost, hiring, hire purchase costs as well as subscription fees for EV charging facilities.

In Attachment 20 of the Budget 2022 proposal, the proposed tax-free timeline for CBU EVs is a 24-month period ending on December 31st 2023. There is also a proposal to spur the local assembly (CKD) EVs, via the same tax-free incentives (excise, import and sales tax) up to December 31st 2025.

Nothing was mentioned on self-charging hybrid and plug-in hybrid vehicles, which the majority of the local assembly plants are churning out.

Also allocated is an RM30 million subsidy for the purchase of a Child Restraint System (CRS) or child seats, targeting 188,000 users to the tune of 50% or up to RM150 for families under the B40 category.

Public transportation users in Klang Valley meanwhile will continue to enjoy the ‘My50’ unlimited travel pass on bus and rail, while students up to Form 6 only need to fork out RM5 a month for a ‘MyRail5’ pass.

The government is also allocating up to RM1.5 billion will be set aside for rural road projects and inter-rural connection roads which span over 500 km and will benefit 130,000 local citizens.      

Meanwhile, the government will allocate RM200 million for the subsidy of transportation and distribution costs of essential items to rural areas, especially in the deeper areas of Sabah and Sarawak.

Images are screenshots from RTM1 live broadcast



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