Government not studying ways to minimize impact on CKD car prices as OMV/402 excise tax review looms – paultan.org

As previously reported, the implementation of the revised excise duty rules under PU(A) 402/2019-Excise Tax Regulations (Determination of Value of Locally Produced Goods for Excise Purposes), which was supposed to start this year, had been postponed until January 2026. The latest indication from the government is that the revision is still on track, but the country is currently exploring ways to curb potential car price increases once the new regulations come into effect.

This is because the ‘402’ revision, or open market value (OMV) revision, will widen the scope of taxable items for locally assembled (CKD) vehicles by expanding the excise duty, which is currently only applied to production costs, to non-production costs such as sales, marketing, administrative costs and profit.

While this move is expected to increase prices of locally assembled CKD vehicles, it remains to be seen how much. It was initially indicated that prices for CKD cars and bicycles could increase by 10 to 30%, but the Ministry of Finance firmly denied this would be the case in February, stating that the vehicle valuation method was still under investigation and that a final decision on the matter had yet to be made.

The engagement is reportedly still ongoing. According to Deputy Finance Minister Lim Hui Ying, the government is currently collecting data and holding consultation sessions with industry players to gain feedback and find workable solutions to address concerns about the impact of the regulations on CKD vehicles. The edge reports.

She said the actual impact on vehicle prices is yet to be determined as local assemblers operate under different business models, leading to inconsistencies in duty calculations. “Nonetheless, the government will take mitigation measures to minimize the impact on the public,” she told the Dewan Rakyat. Lim said this in response to a question from Datuk Shamshulkahar Mohd Deli (BN-Jempol), who asked whether the government plans to continue or delay the enforcement of the OMV/402.

In July, Malaysian Automotive Association (MAA) president Mohd Shamsor Mohd Zain had said there was no walk away from the OMV/402, but added that a new method would be announced that would minimize its impact. “We have been in contact with the Ministry of Finance, and it is understandable that the OMV will certainly be implemented as that is an essential part of the alignment with the World Customs Organization guidelines,” he said at the time.

He had added that under the published format, the staggered increase in on-the-road (OTR) prices of CKD vehicles would fall within the above-mentioned percentage, but there were indications that a revised approach would be adopted to mitigate the situation. “Based on the feedback we have received, the indication is that there will be a new method or a new way of calculating to minimize the impact,” he had said in July. What and how that is remains to be seen.

Do you want to sell your car? Sell ​​it with Auto.