KUALA LUMPUR (Oct 10): Imported fully-assembled electric vehicles (EV) will no longer be duty-free starting next year, according to the Ministry of Finance (MOF).
Excise duty exemptions on completely-built-up (CBU) EVs will be removed beginning 2026, the MOF said in its Fiscal Outlook and Federal Government Revenue Estimates report.
Overall excise duties collection is expected to rise 2.3% to RM12.79 billion in 2026 from RM12.51 billion this year.
This higher collection will be driven by moderate motor vehicle production, introduction of new vehicle models and intensified promotion activities, and the excise duty exemption removal on CBU EVs.
The exemption, first introduced under Budget 2022, was previously extended twice — from its original expiry date of end-2023 to end-2024, and then to the current expiration of end-2025.
In contrast, the exemption for completely-knocked-down (CKD) or locally assembled EVs, also first introduced in Budget 2022, is only set to expire at end-2027 — after it was extended from its initial deadline of end-2025 under Budget 2023.
Duty exemption for locally assembled vehicles promotes local assembly, manufacturing
The expiration of duty exemption for CBU EVs comes at a time when local car makers Proton entered the EV market late last year, while Perodua is expected to launch its own EV at the end of this year.
Meanwhile, foreign players have already set out plans to locally assemble their EVs within Malaysian borders.
Chinese EV giant BYD is building an assembly plant in Tanjung Malim, Perak, while European giant Stellantis has set up a site in Gurun, Kedah. Chinese car maker Leapmotor partnered with Stellantis to locally assemble its EVs at the Gurun plant.