The Federation of Motor and Credit Companies Association of Malaysia (FMCCAM) has urged the government to extend the sales and service tax (SST) exemption to those who book their vehicles after June 30 this year if they register them by March 31, 2023.
As reported by FMT, FMCCAM president Datuk Tony Khor said extending the registration deadline but not the SST exemption would cause a significant spike in bookings that could overwhelm dealers.
“We already have over 200,000 bookings and it won’t be easy for dealers to manage the demand in such a short period,” he said. FMCCAM represents the interests of around 3,500 independent car dealers in the country.
On Monday (June 20), finance minister Tengku Datuk Seri Zafrul Abdul Aziz confirmed that the SST exemption will not be extended beyond June 30, 2022, but the government is making an allowance for the SST exemption to be applied for any vehicle booked before July 1 and registered before March 31, 2023.
With only a few days left until the SST exemption (100% for CKD cars, 50% for CBUs) ends, it’s likely that an avalanche of bookings will come in as potential car buyers look to take advantage of the tax holiday to “lock in” pricing.
Khor said the government should instead base the SST exemption on the registration date instead of the booking date. However, he said he was happy with the additional nine months given for registration considering car companies are currently faced with inconsistent vehicle production schedules due to global supply chain issues.
On a related note, economist Geoffrey Williams of the Malaysia University of Science and Technology told FMT that the government’s decision not to extend the SST exemption was the right one.
“We are coming out of the Covid-19 pandemic, and we should remove the special measures put in place to support various sectors during that policy-induced crisis,” he said, adding that it was fair that buyers were allowed time to register their vehicles. “There will be some volatility in sales but eventually this will smooth out. There are no long-term implications for the economy or the automotive sector,” he added.
Did the government make the right decision by not extending the SST exemption period? Will you be rushing to place a booking, or have you already done so? Share your thoughts in the comments below.