Vehicle Maintenance May Cost More Next Year Due To Tax Increases

According to Budget 2024, the existing 6% service tax rate will be replaced with an 8% rate on March 1st. Car servicing will become more expensive starting next year due to the new 8% tax rate that will be applied to labor charges since repairs and maintenance do not fall under the exempt categories under the higher tax regime.
Despite the lack of official confirmation, the Federation of Motor and Credit Companies Association of Malaysia (FMCCAM) will request that the government consider waiving the additional 2% service tax hike for small workshops and those who drive used cars.

Its president, Datuk Tony Khor told The Star that while the new service tax rate will not directly affect car prices, it will undoubtedly affect maintenance costs.

He also added that any increase could be significant for second-hand car owners on a tight budget. "I understand that car maintenance expenses may increase but as owners, we also need to ensure vehicle safety and roadworthiness," he told reporters.
According to tax expert Datuk Koong Lin Loong, while car prices are unlikely to be affected, owners will need to spend more money on maintenance.
“Car prices will only be affected by sales tax, import duty, excise duty and approved permits.

“However, car-related services such as repairs and maintenance will involve a labour charge and the additional 2% tax,” he said.