Home Finance specialist Finance Minister declares OHS exemption for vehicles only until June 30, no more extension

Finance Minister declares OHS exemption for vehicles only until June 30, no more extension

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Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz noted that 868,422 vehicles were sold during the exemption period, resulting in tax savings of RM4.7 billion. — photo by Bernama

By Zarah Morden

Monday, June 20, 2022 3:14 PM MYT

KUALA LUMPUR, June 20 – The federal government will not extend the sales and service tax (SST) exemption for the purchase of new vehicles after June 30.

However, Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz, who made the announcement today, noted that some 264,000 units had yet to be delivered to buyers due to disruptions in the global supply chain. .

“In order to allow those who have placed orders for new vehicles to benefit from the SST exemption, the registration of new vehicles with the Department of Road Transport Malaysia has been extended until March 31, 2023,” it said. he said in a statement this afternoon. .

“The extension of the vehicle registration period is an intermediate solution to balance the interests of consumers and the national tax revenues which must be increased after the pandemic to ensure that the well-being of the population and the economic well-being of the country continue to be preserved,” he added.

The minister noted that 868,422 vehicles were sold during the exemption period, resulting in RM4.7 billion in tax savings.

The SST exemption for vehicles was introduced in June 2020 under the Penjana scheme, to stimulate demand within the local automotive industry.

It was originally scheduled to end on December 31, 2020 but an extension was granted until the end of this month.

“With the reopening of economic sectors, the auto sector has started to operate as usual again,” Tengku Zafrul said, apparently explaining the government’s reason for maintaining the June 30 expiry for the exemption despite market expectations. .

Last week, RAM Ratings Services Bhd ratings specialist Ben Inn expressed hope that the government would extend the SST exemption period in its current form or at reduced rates as demand is expected to fall after the program expires.

“Consumer demand for cars will also be dampened by higher inflation, worries about the economy, tighter financing and higher cost of owning a car due to rising interest rates and the rationalization of fuel subsidies.

“All things considered, we believe that a total industry volume of 600,000 units in 2022 is possible, however, (it depends) on the availability of critical parts and foreign workers,” Inn said as quoted by l national news agency Bernama.

In January, the Malaysian Automobile Association forecast a 17.9% growth in total industry volume to 600,000 units in 2022 from 508,9111 in 2021.