In keeping with the Malaysian finance ministry‘s ‘Fiscal Outlook and Federal Government Revenue Estimates‘ report, total government revenue from vehicle import duties, excise duties and sales tax this yr is estimated to be RM11.1 billion, and this is anticipated to rise 4.5% to RM11.6 billion next yr.
The 2025 estimates may be broken down into RM630 million in import duties, RM3.97 billion in CKD excise duties (cars plus motorcycles), RM3.27 billion in CBU excise duties (cars), RM2.11 billion in CKD sales tax (passenger vehicles plus industrial vehicles) and RM1.13 billion in CBU sales tax (also passenger vehicles plus industrial vehicles).
Also provided are the 2026 estimates, and you possibly can see from the table below that while import duty revenue shouldn’t be expected to vary much and excise duty revenue is simply expected to grow by 2.3%, the federal government expects to gather 10.4% more sales tax next yr.
One thing that may change come next yr is that fully-imported (CBU) EVs will begin contributing to import and excise duty revenues. Currently, CBU EVs are import- and excise-duty free, but they’re subject to sales tax, and EVs still make up a really small piece of the Malaysian pie.
So the projected 10.4% rise in sales tax revenue has us wondering. It is feasible that the relatively high quantum (around RM3 billion) and projected increase is because sales tax is applied in spite of everything the duties, which creates a compound effect. One other possible explanation is a forecasted increase in total industry volume (TIV) for 2026 over 2025.
Now, while RM11 billion in revenue may sound like quite a bit, keep in mind that the federal government typically has to spend around RM20 billion annually in RON 95 petrol subsidies (Budi Madani RON 95 minuses just RM2.5 billion-RM4 billion from that figure). So, low cost cars or low cost petrol? Pick one, because you possibly can’t have each!
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This Article First Appeared At paultan.org
