Budget 2027: MAA Proposes Personal Income Tax Rebate To Boost xEV Adoption, Vehicle Scrapping
KUALA LUMPUR, Sept 28 (Bernama) -- The Malaysian Automotive Association (MAA) is proposing that the government provide a personal income tax rebate for the purchase of electrified vehicles (xEVs) and voluntarily scrapping of old vehicles in the 2027 Budget.
MAA president Mohd Shamsor Mohd Zain said the association is suggesting a personal income tax rebate of between RM7,000 and RM10,000 to accelerate the mainstream adoption of xEVs, particularly among middle-income taxpayers keen on xEVs but sensitive to the price.
The MAA proposal was submitted to the Ministry of Finance recently, he told Bernama.
Mohd Shamsor said there is no direct purchase subsidy or tax rebate currently available for xEV buyers, citing that the existing relief is mainly limited to charging equipment.
“The move can reduce the upfront cost of xEV ownership and improve affordability for xEVs,” he said.
Mohd Shamsor said MAA proposed that the government extend the existing RM2,500 individual income tax relief for home charging expenses beyond 2027.
He said this would complement existing supply-side incentives by stimulating actual consumer demand rather than relying solely on manufacturers' incentives, as well as supporting Malaysia's 2030 electrification target by encouraging consumers to bring forward their vehicle replacement decisions.
“This will create stronger market demand for locally assembled xEVs, supporting manufacturers' decisions to introduce additional completely knocked down (CKD) or locally assembled xEV models and invest in local production.
“It will also improve the utilisation of Malaysia's growing charging infrastructure, creating a positive cycle between EV adoption and charging-network investment,” said Mohd Shamsor.
In the automotive industry, xEV comprises hybrid electric vehicles (HEV), plug-in hybrid electric vehicles (PHEV), battery electric vehicles (BEV), and fuel cell electric vehicles (FCEV).
Mohd Shamsor said that MAA proposed an end-of-life vehicle programme offering a RM5,000 personal income tax rebate for every vehicle voluntarily retired and scrapped, specifically targeting vehicles aged 20 years or older. This initiative encourages purchasing a new locally assembled vehicle.
He said this would complement the government's existing matching grant programme and provide a stronger financial motivation for owners of ageing vehicles to replace them with newer, safer, more fuel-efficient and environmentally friendly vehicles.
“The programme will also support fleet renewal, improve road safety, reduce emissions and stimulate domestic automotive demand,” he said.
Mohd Shamsor stressed that scrapping must be carried out through government-approved scrappage facilities.
He said MAA also hoped that the government would consider the extension of the 100 per cent green investment tax allowance (GITA) to charging point operators’ investments and establish an automotive supplier capability development fund.
Mohd Shamsor said suppliers are required by original equipment manufacturers (OEM) to invest in tooling, testing, validation, certification and automation before receiving any confirmed or sufficient sourcing volumes.
For smaller suppliers, the initial investment could be difficult to justify and finance, especially in developing new xEV-related components, he said.
“This would assist in the transition towards xEVs, where Malaysian suppliers need to develop new capabilities in areas such as electric powertrain components, battery-related components, electronics, thermal management, lightweight materials and other next-generation automotive technologies.
“Strengthening of Tier 2 and 3 suppliers will help reduce dependence on imported components and build a stronger local automotive supply chain,” he said.
Prime Minister Datuk Seri Anwar Ibrahim, who is also finance minister, is scheduled to table Budget 2027 at the Dewan Rakyat on Oct 9.
-- BERNAMA