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The Malaysian Automotive Association (MAA) has proposed a personal income tax rebate of RM7,000 to RM10,000 for buyers of electrified vehicles (xEVs) in Budget 2027.
MAA president Mohd Shamsor Mohd Zain told Bernama the proposal was submitted to the Finance Ministry recently.
He said the rebate is aimed at middle-income taxpayers who are keen on xEVs but sensitive to the price.
Mohd Shamsor said there is currently no direct purchase subsidy or tax rebate for xEV buyers.
He said the existing relief is mainly limited to charging equipment.
“The move can reduce the upfront cost of xEV ownership and improve affordability for xEVs,” he said.
MAA also proposed extending the RM2,500 individual income tax relief for home charging expenses beyond 2027.
Mohd Shamsor said the measures would complement existing supply-side incentives by stimulating consumer demand, rather than relying only on manufacturers’ incentives.
He said this would also support Malaysia’s 2030 electrification target by encouraging consumers to bring forward their vehicle replacement decisions.
He added that stronger demand would support manufacturers’ decisions to introduce more completely knocked down (CKD) or locally assembled xEV models and invest in local production.
“It will also improve the utilisation of Malaysia’s growing charging infrastructure, creating a positive cycle between EV adoption and charging-network investment,” he said.
In the automotive industry, xEV covers hybrid electric vehicles, plug-in hybrid electric vehicles, battery electric vehicles and fuel cell electric vehicles.
RM5,000 Rebate For Scrapping Old Vehicles
MAA also proposed an end-of-life vehicle programme.
Under it, owners would get a RM5,000 personal income tax rebate for every vehicle voluntarily retired and scrapped.
The programme targets vehicles aged 20 years or older and encourages the purchase of a new locally assembled vehicle.
Mohd Shamsor said it would complement the government’s existing matching grant programme.
He said it would give owners of ageing vehicles stronger financial motivation to replace them with newer, safer and more fuel-efficient models.
“The programme will also support fleet renewal, improve road safety, reduce emissions and stimulate domestic automotive demand,” he said.
He stressed that scrapping must be carried out through government-approved scrappage facilities.
Push For Charging Operators And Suppliers
MAA also hopes the government will extend the 100% green investment tax allowance to investments by charging point operators.
It is also seeking an automotive supplier capability development fund.
Mohd Shamsor said suppliers are required by original equipment manufacturers (OEMs) to invest in tooling, testing, validation, certification and automation before receiving any confirmed or sufficient sourcing volumes.
He said this could be difficult to justify and finance for smaller suppliers, especially when developing new xEV-related components.
Malaysian suppliers need to develop new capabilities in areas such as electric powertrain components, battery-related components, electronics, thermal management and lightweight materials, he said.
“Strengthening of Tier 2 and 3 suppliers will help reduce dependence on imported components and build a stronger local automotive supply chain,” he said.
Prime Minister Datuk Seri Anwar Ibrahim, who is also the finance minister, will table Budget 2027 at the Dewan Rakyat on 9 October.
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