Going EV: What the Malaysian government is doing to charge up the transition

Going EV: What the Malaysian government is doing to charge up the transition

09 Jul 2024

The Malaysian government has made the adoption of electric vehicles among the thrusts of its National Energy Transition Roadmap (NETR).

To this end, it is targeting for EVs to account for 15 per cent of all vehicles sold by the year 2030, rising to 80 per cent by 2050.

Here are they ways the government is encouraging Malaysians to pick battery power over petroleum power for their next vehicle purchase.

Import duty, excise exemptions

While EV prices may appear high now, they are lower than they would be if the government had imposed the normal automotive taxes and duties on them. Completely built up (CBU) EVs were granted full import and excise duty exemption for four years from January 1, 2022 to December 31, 2025.

Components for locally assembled EVs are currently fully exempted from an import duty for six years until 31 December 31, 2027.

If they were to be locally-assembled, EVs would enjoy a full exemption of excise duty and sales tax exemption also for six years in the same period.

Road tax exemption

EV owners have been exempt from paying road tax since 2022 and will continue to enjoy this privilege until December 31, 2025.

They will also enjoy a lower tax rate in 2026, after the exemption expires, that will be based on the power output of their EV.

When unveiling the new structure, Transport Minister Anthony Loke said it was 85 per cent lower vis-a-vis petrol powered vehicles.

Subsidy to charging facilities

To encourage the growth of the EV charging network in Malaysia, the government is offering individuals RM2,500 in yearly income tax relief through to 2027 for the installation, rental, and purchase of EV charging equipment or subscription fees.

Electric bikes, too

The government is also offering up to RM2,400 in tax rebates to encourage individuals to adopt electric-powered motorcycles.

However, this incentive has only been announced for the 2024 assessment year and it is only available for individuals earning no more than RM120,000 annually.

Tax incentives for manufacturers

Companies investing in the assembly or manufacturing of energy efficient vehicle (EEV) including hybrids and electric or components for such vehicles are eligible for the following incentives:

Income tax exemption through pioneer status incentive with tax exemption of 70 per cent or 100 per cent on statutory income respectively for a period of five or ten years; or

Equivalent income tax exemption tax investment allowance of 60 per cent or 100 per cent on eligible capital expenditure incurred within five or ten years respectively from the date of the first eligible capital expenditure. This allowance can be deducted up to 100 per cent of the statutory income for each year of assessment.

Boosts for charging operators

Companies investing in green technology services involving EVs such as installation, maintenance, repair of EV charging equipment, EV infrastructure and charging stations are eligible for a 70 per cent tax exemption for three years from the start of their operations.

They are also eligible to receive a Green Investment Tax Allowance (GITA) of 100 per cent of qualifying capital expenditure incurred on green technology projects for the period of 5 years from the date of first qualifying capital expenditure incurred.

Source: Malay Mail