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MM2H – The Tax-Free Car Privilege

People moving here under Malaysia My Second Home (MM2H) are entitled to one tax-free car. They can either bring their own car into the country tax-free or purchase a locally assembled car free of taxes. If you choose> to bring in your own car, you must do so within six months of your visa being approved. Since Malaysians drive on the left side of the road it should be a right hand drive car. If you want to buy a car in Malaysia tax-free you have one year to make the purchase from the date your visa is approved. In both cases you have to obtain formal approval first from the Ministry of Finance.

If you want to import a car you need to have owned it before you apply for the MM2H visa. It has to be imported from either your own country or your place of last residence. There are two important considerations if you plan to import your own car. First is ensuring that the servicing will not be a problem so that bringing in a car which is not sold in Malaysia does not cause you headaches. The second consideration is the engine size. Although the relatively cheap price of petrol will be a benefit, the road tax is based on the engine size so buying a car with a large ‘cc’ could prove expensive. If you choose to buy a car in Malaysia then it should be noted there are three broad categories. Those are built by Malaysian auto makers such as Proton or Perodua; those which are assembled locally and have a mixture of imported and local components (referred to as “completely knocked down” or CKD); and those that are imported ready to sell (referred to as “completely built up” or CBU). The duty-free eligibility only applies to the first two categories.

When you come to sell your tax-free car the buyer will have to pay the applicable duties which will be based on the age of the car. The customs department will not disclose the formula so it is not possible to predict what the duty will be but it will of course be less than that on a new car.

If you decide to buy a duty-paid car you may well find that overall it does not cost much more than your car back home. The lower petrol and servicing costs go a long way to offsetting the higher price you originally pay for the car. One expat who bought a duty-paid car calculated that it was actually cheaper for him to buy and operate his car here than using the same car in the United Kingdom.

You can find out the latest rules regarding duty-free cars as well as some tax-free car prices on our website www.MM2H.com.




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