Vehicle prices generally lower with GST, says Customs D-G

He explained that the GST was six per cent while the current vehicle sales tax was 10 per cent. The vehicle sales tax will be abolished on April 1, he said.

Khazali told Bernama the doubt over whether the prices would rise or drop came about from the confusion among car dealers as to how they were going to dispose of the vehicles for which they had already paid the 10 per cent vehicle sales tax.

"The Customs will reimburse the dealers the 10 per cent tax once they produce documented proof that they have paid the tax but had yet to sell the vehicle as of March 31," he said.

Kuala Lumpur and Selangor Car Dealers and Credit Companies Association president Khoo Kah Jin said he did not expect a significant drop in vehicle prices as the difference was likely to be offset by the prices of imported vehicle components due to the higher exchange rate.

"The vehicle prices will go down by between two and three per cent with the GST," he said.

"However, the prices may increase slightly depending on the foreign exchange rate because most vehicle components are imported, for example from the United States, Europe and Japan," he said.

Khoo said used car prices would also be subject to GST but these prices would be placed under the margin scheme to avoid double taxation.

"Buyers (of used cars) will not be affected by the prices as the GST will be imposed only on the dealers based on the profit from a sale.