From 1 April 2015 GST will be implemented in Malaysia for the very first time. The 6% GST has created enough problems for all industries including the automotive industry. there has been various discussions about how it will affect the final price of the cars. The original sales tax of 10% will be removed and the 6% GST will replace it, this naturally created the impression that there will be nett discount since there is 4% less tax to pay. However this is not quite true since GST is charged at every level of the sales chain and this could potentially lead to high final price.
The original sales tax of 10% is charged upon importation (for imported cars) but GST is charged at the point of import, plus when the distributor sells the cars to dealers and when dealers sell the cars to customers. The nett effect could see the final price go up by 1-2% depending on the situation. This naturally does not bode well for customers since everything has gone up in price recently ranging from food to basic supplies.
Then there are also cases where some car dealers will use this opportunity to mark up prices a little more to make more money in the name of GST implementation. The problem is the prices between layers are not transparent and no one knows if there is any sort of profiteering involved. The Malaysian Govt should take actions to check and investigate car dealers and determine if there are any profiteering involved and if there are such cases a suitable punishment or penalty should be imposed.
how the automotive industry will shape up after the introduction of GST will be a hot topic for many months to come.
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