The Malaysian Automotive Association (MAA) has revealed the new tax rates that the government is going to impose on fully-imported, Completely Built-Up (CBU) battery-powered electric vehicles starting this year. Previously, CBU EVs were exempted from import and excise duty up until 31 December 2025.
What’s the tax rate for CBU EVs in Malaysia?
According to MAA, the general import duty for CBU EVs is 30%, while the excise duty rate has been set at 10%. Both figures were similar to the rates before EV tax exemptions were implemented on 1 January 2022.
At the same time, let’s not forget that there’s also the 10% sales tax in the picture. All in all, expect to see a price hike for most EVs in Malaysia, which are still CBU units.
That being said, CBU EVs from countries that have free-trade agreements (FTAs) with Malaysia will have lower import tax rates, though. For example, the import duty for CBU EVs from China is said to be only 5% based on the tariff reduction schedule of the ASEAN-China Free Trade Agreement (ACFTA).
This is rather interesting, as most of the EVs in Malaysia were imported from China. That’s including the Tesla Model 3 and Model Y for Malaysia which were manufactured in Gigafactory Shanghai as well as the newly launched BMW iX1 eDrive20L.
CKD EVs to the rescue?
The best way for automakers to avoid being hit by these taxes is by setting up a Completely Knocked-Down (CKD) local assembly operation in Malaysia. Several companies have actually set up CKD operations here, and the number is expected to grow further starting this year.
Aside from hometown heroes Proton and Perodua, automakers that already have CKD operations for their EVs in Malaysia include Volvo, Mercedes-Benz, Chery, TQ Wuling and BMW. BYD, Leapmotor, MG, and XPeng are expected to kickstart their CKD operation this year.
Additionally, Zeekr and Volkswagen have also committed to CKD operations, although they have yet to announce a confirmed timeline. CKD EVs are exempt from excise duty and sales tax until the end of 2027, while there is also import duty exemption on their components.
