PUTRAJAYA, April 24 — The government announced today that it will remove the Ad Valorem Registration Fee (AVRF) from locally-made trailers and semi-trailers starting from July 1 this year.
Transport Minister Anthony Loke said the move is necessary to ensure that locally-manufactured trailers are able to compete with imported rigs, as the AVRF that is charged on top of sales tax makes the former more expensive than the latter.
“Based on current regulations, vehicles that have been exempted from import duty, including locally-made vehicles will be charged with the AVRF as well as sales tax from the Customs Department,” he told the media.
Loke said this comes as Malaysia signed several bilateral Free Trade Agreements (FTA) with countries including its Asean neighbours, Japan, Pakistan, India, New Zealand, Chile, Australia, Turkey, China and South Korea.
“Through the FTA, imported trailers and semi-trailers from said nations are exempted from import duty,” he added.
In addition to that, Loke also explained that certain container trailer manufacturers registered under the Sales Tax Act 1972 are also exempted from sales tax.
“Because of this, all import vehicles that are involved in the exemption of duty import and sales tax, in general, have been exempted from paying any fees including AVRF.
“This creates an imbalance competitive environment for locally made trailers that have been charged with AVRF and sales taxes. Locally, trailer producers have to compete with import trailer producers who have cost elements that are cheaper and more competitive,” he said.
The ministry also recorded an uptake of imported trailers being used as they recorded 141 registered purchased in 2016, 219 in 2017, and 636 in 2018.
To date, there are 399 local trailer and semi-trailer manufacturers nationwide.
Loke said that the exemption would bring some RM19 million to RM20 million in losses to the government.
“However, the loss of this source of revenue will be gained by indirect sources through the reduction of the cost of doing business and the development of local vehicle producers,” he said.