AFTA, ACFTA 2026 CBU EV Imports to Face 5/10/10% Taxes - MAA

With 2025 now concluded, Malaysia’s electric vehicle (EV) incentive landscape has shifted. The blanket tax exemptions and road tax holiday that previously underpinned EV adoption have ended, with only one element confirmed so far — EV owners will now be required to pay road tax.

During a recent media engagement on the Malaysian Automotive Association’s (MAA) 2025 industry review and 2026 outlook, MAA president Mohd Shamsor Mohd Zain confirmed that policy clarity remains limited. To date, there has been no official announcement on the EV tax structure for 2026.

This aligns with the Ministry of Investment, Trade and Industry’s (MITI) earlier position that data collection is still ongoing, with continued engagement with industry stakeholders before the new excise framework is finalised. The stated objective is to soften the impact of any policy changes, keep EVs accessible, and sustain adoption momentum.

In the absence of a formal announcement, the default assumption had been a return to the pre-incentive structure, under which fully imported (CBU) EVs would face a combined 30% import duty, 10% excise duty and 10% sales tax.

However, we understand from an industry source that a more moderate framework may be applied, broadly reflecting the previous treatment of EVs imported under the ASEAN Free Trade Area (AFTA) and the ASEAN–China Free Trade Area (ACFTA), supported by electronic Form E documentation.

Under this structure, CBU EVs would be subject to a 5% import duty, 10% excise duty and 10% sales tax from January 2026, rather than the previously anticipated 30/10/10 combination.

Even under a 5/10/10 structure, price increases would be unavoidable, though far less disruptive. In cumulative terms, this would translate to an effective price increase of approximately 25% to 30%.

Using current prices as reference, the XPeng G6 Standard, now priced at RM158,888, would rise to around RM200,000. The Tesla Model Y Rear-Wheel Drive, currently priced at RM195,450, would move closer to the RM245,000 to RM250,000 range. These are substantial increases, but at the end of the day it is up to the brands if they decide to increase or absorb the tax.

Separately, Mohd Shamsor also confirmed that the revised Open Market Value (OMV) mechanism under PU(A) 402, which has once again been deferred by six months has been theoretically finalised and is expected to have minimal impact on CKD vehicle pricing. 

This comes as a relief to manufacturers, who had been concerned that OMV implementation could significantly narrow the price gap between CKD and CBU vehicles, potentially weakening the business case for local assembly and undermining localisation incentives.

At the same time, locally assembled (CKD) EVs continue to enjoy tax incentives until 2027, a window intended to encourage manufacturers to accelerate localisation efforts. However, the timeframe remains tight, limiting the ability of some brands to fully monetise CKD investments ahead of a potential tax implementation in 2028. 

Mohd Shamsor added that MAA is actively lobbying for CKD EV tax exemptions to be extended until 2040, in line with Malaysia’s long-term EV ambitions.

On paper, the government’s targets remain clear: 20% xEV penetration by 2030, rising to 50% by 2040 and 80% by 2050. In practice, achieving these goals will depend on affordability, investor confidence and, above all, consistent and predictable policy signals — which remain lacking.