Behind the Wheel
SST Exemptions For Cars To End On 31 December 2020 Together With Any Dreams Of Buying Cheaper Cars
If you were in the market for a new car this year, the sales tax (SST) exemption for new vehicles sold in the country that started on 15 June 2020 and was proposed to end on 31 December 2020 was a good time to put pen to paper.
The scheme saw the SST on new vehicles being discounted was part of the Ministry of Finance’ (MoF) economic recovery plan or Pelan Jana Semula Ekonomi Negara (Penjana) that aimed to be a shot in the arm for the country’s economy that fell during the pandemic.
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Boost new car sales it did and the Malaysia Automotive Association (MAA) was lobbying to have the exemption period extended to 30 June 2021.
However, the MoF has denied the request by the MAA, meaning your dreams of purchasing a new vehicle for cheaper will end on 31 December 2020 together with the SST exemption.
Our friends at Careta reported that the finalisation of the SST exemption meant that for new cars scrambling to meet the cut-off point will need to be delivered to showrooms/sales outlets by 31 December 2020 and be registered by 31 January 2021.
If the car reaches the sales lot after 31 December 2020, the full price with SST levied will be applied to the owner.
The primary reasoning for the MAA’s request to extend the SST exemption to the middle of 2021 falls squarely on many carmakers being unable to meet the rapid surge in demand for new vehicles following the exemption.
Per Wapcar, the pandemic led to a disruption of the automotive manufacturing supply chain. This meant manufacturers adjusting to reduce production seeing that sales dropped abruptly in the first half of the year.
However, the Penjana stimulus package meant a rapid surge in sales that manufacturers couldn’t adjust for overnight. Ramping up large scale manufacturing isn’t like turning the volume up on your radio; a flick of a switch. Instead, it takes months to do so as the supply chain must first be cranked up to avoid components running dry.
Therefore, although carmakers have collected your orders prior to 31 December 2020, the truth is if your car isn’t delivered to the dealer’s lot by said date and registered by 31 January 2021, you might end up paying more as SST will be levied on the final price.
If you’ve already made a booking and aren’t keen to pay more, have a chat with your sales agent immediately to clarify the final price.
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