The announcement made during Budget 2024 was that the service tax rate would rise from its current rate of 6% to 8% the following year. According to recent announcements from the customs agency, this will begin on March 1.

Food and beverage, telecommunication, parking space provision, and logistics services are among the industries that are excluded from the new rate; however, auto maintenance and repairs are not included in the revision's exempt categories.






As a result, labor costs associated with vehicle service will now be subject to the new 8% tax rate; however, parts utilized during the servicing process will remain exempt. According to The Star, this will probably mean higher overall car maintenance expenditures when the new rate kicks in.

The Federation of Motor and Credit Companies Association of Malaysia (FMCCAM) industry participants have urged the government to provide clarification on the problem, although there has been no formal confirmation of this.

According to its president, Datuk Tony Khor, the higher service tax rate will undoubtedly have an effect on maintenance expenses even though it won't directly affect automobile prices. "Although the government has not confirmed it, I assume the new tax rate will apply to auto workshops too," he remarked.





He continued by saying that those who purchase used cars but have a tight budget might find any increase to be substantial. He stated, "I know that auto maintenance costs can go up, but it's our responsibility as owners to make sure our cars are safe and roadworthy." Khor announced that the group would be asking the government to think about exempting small workshops and second-hand automobile owners from the additional 2% service tax levy.

Similar to Khor, tax expert Datuk Koong Lin Loong stated that although automobile prices are unlikely to change, owners will have to pay more for upkeep if the new rate is implemented.

Only adjustments to sales tax, import duty, excise duty, and authorized permits will have an impact on car prices. However, labor costs and an extra 2% tax will apply to auto-related services like maintenance and repairs, he stated.