According to 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 year is estimated to be RM11.1 billion, and this is expected to rise 4.5% to RM11.6 billion next year.
The 2025 estimates can 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 commercial vehicles) and RM1.13 billion in CBU sales tax (also passenger vehicles plus commercial vehicles).
Also provided are the 2026 estimates, and you can see from the table below that while import duty revenue is not expected to change much and excise duty revenue is only expected to grow by 2.3%, the government expects to collect 10.4% more sales tax next year.
One thing that will change come next year 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 are subject to sales tax, and EVs still make up a very small piece of the Malaysian pie.
So the projected 10.4% rise in sales tax revenue has us wondering. It is possible that the relatively high quantum (around RM3 billion) and projected increase is because sales tax is applied after all the duties, which creates a compound effect. Another possible explanation is a forecasted increase in total industry volume (TIV) for 2026 over 2025.
Now, while RM11 billion in revenue may sound like a lot, remember that the 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, cheap cars or cheap petrol? Pick one, because you can’t have both!
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