KUALA LUMPUR, Feb 23 — The full implementation of the open market value (OMV) tax structure for locally assembled Completely Knocked Down (CKD) vehicles will not burden the B40 and M40 income groups, said Investment, Trade, and Industry Deputy Minister Sim Tze Tzin.
The Excise (Determination of Value of Locally Manufactured Goods for the Purpose of Levying Excise Duty) Regulations 2019 apply to all locally manufactured goods and are not limited to vehicles.
“The impact on vehicle prices will be minimal. The government will ensure affordable vehicles for the B40 and M40 groups, based on the approved tax incentives,” he said in response to Jerantut MP Khairil Nizam Khirudin's supplementary query in the Dewan Rakyat today.
He had asked about the concrete indicators used by the Investment, Trade, and Industry Ministry to determine whether the changes in vehicle prices would affect the B40 and lower M40 income groups.
Khairil also asked whether the impact assessment of the revised OMV excise tax regulation — the implementation of which has been deferred since 2019 — could be presented in the Dewan Rakyat and communicated to the public before the policy is implemented.
Sim added that previously, the government had provided a five-year exemption, valid until June 30, 2026, that allowed excise values for locally manufactured vehicles to be calculated based on manufacturing costs.
The exemption period was a transition phase that allowed manufacturers to adjust their business models and cost structures.
He noted that the government must ensure the industry’s tax structure is fair and equitable, without favouring any particular party.
The government had introduced the New Customised Incentive Mechanism (NCM), under which companies that have demonstrated significant investment commitments, increased local content, and contributed to vendor development and exports are eligible for higher excise duty exemptions.
The approach aims to minimise the impact of the regulation’s implementation, particularly for new vehicle models, while ensuring that more than 90 per cent of existing models will not see price increases.
