KUALA LUMPUR (July 15): The Malaysian government lost out on a total of RM4.89 billion worth of excise duty on completely-knocked-down (CKD) vehicles from 2015 to 2017 due to the various types of exemptions, including for State Assemblymen, Members of Parliament, embassies, and the government.

These exemptions were also extended to the Returning Expert Program (REP) and Malaysia My Second Home (MM2H), according to the findings of the Federal Ministries/Departments section under the Auditor General's Report 2018 series 1.

There were also exemptions given via special approval from Ministry of Finance (MoF) and excise duty exemption for energy-efficient vehicles (EEVs).

During this period, 100% excise duty exemption has been approved for 73,250 units of CKD vehicles.

From the RM4.89 billion worth of excise duty exemption in total, it is revealed that the exemption from three states namely Pahang, Kedah and Selangor amounted to RM4.095 billion (83.75%).

The report also noted that the bulk of the excise duty exemption is for EEVs and fleet management service provider SPANCO's vehicles, which covers RM3.862 billion (94.3%) of all approved exemptions.

"In the opinion of the audit, the rating of EEVs by JPJ (Road Transport Department) is based on the definition of UN R101, which has not been fully adopted, especially in relation to carbon emissions," said the report. Hence, the 100% exemption in excise duty on company manufacturers' application needs to be reviewed.

This is so that excise duty exclusions will not affect the collection of state revenue and, concurrently, ensure the success of the national automotive policy (NAP) 2014 policy.

For more stories on the AG's Report 2018, click here.