Govt will determine the revised rates for excise duty: MITI

Ministry of International Trade and Industry (MITI) and the Ministry of Finance (MoF) are still in discussion to determine the revised rates for excise duty policy involving locally assembled vehicles

Ministry of International Trade and Industry (MITI) and the Ministry of Finance (MoF) are still in discussion to determine the revised rates for excise duty policy involving locally assembled vehicles.

“As and when the policy is ready, there will be an announcement to be made,” said Deputy Minister Dr. Ong Kian Ming in response to the New Straits Times query during a press conference today.

He said it was premature for the market to speculate the changes in the excise policy for completely-knocked-down (CKD) vehicles, noting that it would lead to increase in car prices this year.

“It is also premature to jump into that conclusion without any formal explanation or clarification from MITI and MoF on this matter,” he said, adding that it was a speculative report as nothing has yet to be confirmed at this point in time.

He however said it was still early for the two Ministries to announce the revised rates for the excise duty involving the CKD vehicles.

Market observers said the potential restructuring of automotive duties likely increase in effective duties and taxes payable by automotive original equipment manufacturers (OEMs) as a result of a change in duty and tax calculation mechanisms.

MIDF Research said the open market value (OMV) would be used as the base to calculate excise duties for CKDs, prior to factoring in industrial linkage programme incentives.

The new definition of OMV under the latest Federal Government Gazette released in Dec 19, last year included royalties, assembly charges and dealer margins, as well as other cost of distribution.

“This is expected to lift the OMV slightly versus the old OMV definition. There is no indication so far on changes to excise duty rates itself, which ranges between 75 per cent and 105 per cent for passenger cars,” said analyst Hafriz Hezry.

He added the higher OMV could result in higher effective duties payable by OEMs, assuming the rates remain status quo.

Source: NST 

Posted on : 20 January 2020
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Last Updated : Thursday 21st May 2020