EV registration hits roadblock as JPJ have yet to implement revised road tax

Electric vehicle (EV) adoption in Malaysia was set to take a big leap in 2022 after it was announced in Budget 2022 that EVs on sale would be exempted from paying import duty, excise duty, sales tax and road tax from 1^st January 2022 until 31^st December 2023. Furthermore, buyers will enjoy an income tax relief of up to RM2,500 for EV charging which includes individual purchases of home charges and for EV charging subscription plans.

Since this offer is only valid until 31^st December 2023, many interested buyers jumped at this opportunity only to find out that they are unable to get their EV registered with the road transport department (JPJ). Paultan.org reports that the buyers were told by the JPJ officer that they had not received any instructions from the top management to waive the road tax fee completely. This prompted the Paultan.org team to reach out to key contacts in the automotive industry to get an answer.

They got an answer confirming that there is a hold on new EV registration. However, it is not due to lack of instructions but rather because JPJ is still updating their systems and processes for the full road tax exemption. But, if you choose to pay the current 50% road tax exemption that was put in place by the Pakatan Harapan (PH) administration in 2019, the registration will be processed.

One source told Paultan.org that currently there is no word on if these buyers will get a refund when the 100% road tax exemption system is implemented. Therefore, should you choose to wait, it is said that the JPJ is trying to get these issues sorted and be up and running by the first quarter (Q1) of 2022.

This is unacceptable as the 100% road tax exemption was announced during Budget 2022 on 29^th October 2021. JPJ had 2 months to get its system updated before the new rule took effect on 1^st January 2022. If you take into account that now is the end of January 2022, JPJ would have had 3 months in total to get its systems sorted out. It is understandable that it might not have had a full workforce due to the pandemic. But on the other hand, with everything being online these days, this shouldn’t have been affected by the lack of workforce in the office.

For anyone unaware, EV road tax is calculated by their output power and not battery capacity. For comparison road tax for regular internal combustion engine (ICE) vehicles are based on the engine capacity. The JPJ has 3 primary categories for private EV – motorcycle, saloon, and vehicles other than saloon (SUV).

For example, the Nissan Leaf has a 40kWh battery connected to an electric motor producing 110kW of power. Doing some math will show a road tax fee of RM374.

For a SUV like the BMW iX xDrive40 with a 71kWh battery and electric motors producing 240kW of power, one will be paying a road tax fee of RM3,063.

The prices calculated above are not including the 50% road tax exemption for electric and hybrid vehicles set by the PH administration.

Despite only needing to pay RM187 in annual road tax fee for the Nissan Leaf, the 100% road tax exemption was nonetheless, promised to us. So in my opinion, I would wait to get the car. But your opinion might be different, so I would like to hear yours in the comments section.

However, the road tax is not the only tax that has confusions surround it. If you were to compare the revised EV prices in 2022 in Peninsular Malaysia, with the prices in tax and duty free Langkawi, you will find that it doesn’t match.

For example, the Mini Cooper SE in Peninsular Malaysia costs RM178,241 with the revised price in 2022. But the same car in Langkawi retails for RM168,790, around RM10,000 cheaper.

This is because, despite the full sales tax exemption being mentioned in Budget 2022, it turns out to be conditional. The Malaysian Automotive Association (MAA) told Paultan.org via a virtual press conference that full sales tax exemption is only for completely knocked down (CKD) or in other words, locally assembled EVs. Additionally, CKD EVs will be exempted from import duty, excise duty, and sales tax until the end of 2025. If you’re wondering, there is no locally assembled EV in Malaysia to take advantage of the 100% tax exemption for CKD vehicles.

Currently, completely built-up (CBU) or in other words, fully imported EVs only get a 50% sales tax exemption, similar to other CBU vehicles as announced by the government. However, CBU EVs will continue enjoying the full import and excise duty exemption until the end of 2023.

The sales tax exemptions for non-EVs and CBU EVs are set to expire on 30^th June 2022.

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