Duty & Tax Exemption

IMPORT DUTY EXCISE AND SALES TAX EXEMPTION FOR MOTOR SPORT

The Ministry of Finance and Ministry of International Trade and Industry has approved a duty and tax exempt scheme for vehicles (go karts, cars and bikes) used solely for the purpose of motor sport competition. The exempt scheme also includes part and components, tyres and safety apparel.

Motorsports Association of Malaysia (MAM) has been appointed by the Ministry of Finance as the governing body to manage the scheme and it will be introduced gradually over the coming months.

This is a service to the motor sport community which is not so simple to manage as it is time consuming in order to ensure compliance, but in line with MAM's service minded philosophy we intend to create a "one-stop-shop" procedure where applicants only need to submit the paperwork to MAM, we will do the rest. 

DUTY & TAX EXEMPTION - QUICK OVERVIEW ON HOW IT WORKS

Anyone seeking exemptions should apply to MAM for endorsement. MAM will then process the application and obtain the necessary permits from the relevant government agencies. All paperwork must be in order prior to import.

  • Compliance with the scheme to be administered by way of a Motor Sport Vehicle Log Book and a computerised database. 
  • Go karts and motor cycles built purely for competition will not require vehicle log book as they cannot be used on the road in any case.
  • Vehicles can only be imported for competition purposes and can never be registered for road use so as not to create any issues/abuse of the AP system.
  • Exempt spare parts can only be imported by the competitor using them. General keeping of exempt parts for sale over the counter is not allowed save for competition tyres and parts for go karts and certain bikes.
  • MAM will make arrangements with tyre importers and importers of safety gear on how to administer sales and compliance if stock is kept in Malaysia.
  • Only licensed competitors/teams and approved racing schools qualify for the exempt scheme.
  • If non-compliance is discovered, Log Book may be revoked which will trigger that full duty/excise and sales tax must be paid. It could also result in substantial fines and confiscation of vehicles and parts.
  • MAM have the technical expertise to monitor compliance, including officials at events who can monitor and report. 

DUTY & TAX EXEMPTION - MORE DETAILED EXPLANATIONS

Vehicles

Under the scheme new and second hand vehicles can be imported and further modified or rebuilt in Malaysia but they can never be registered for private use so as not to create any abuse of the current AP system. 

Locally built vehicles are also exempt from excise duty and sales tax as are locally manufactured parts, tyres and safety apparel.

The scheme is strictly for vehicles which are used solely for motor sport competition. Vehicles which are for daily use also will not qualify.

Rally cars and other off-road vehicles, if they are only used for competition but have to drive on the road (transport stages) in conjunction with events, are eligible as well. MAM are currently working out the registration requirements with JPJ. The compliance will be very strict and while some road testing may be allowed it will be strictly limited. The vehicle registration arrangements and conditions will be made known shortly.

Competitors and Teams will only be granted exempt permits if MAM is satisfied that vehicles and parts are strictly for competition. Importation of vehicles for non existing competition series will not be allowed.

Most vehicles must have a Motor Sport Vehicle Log Book which MAM will issue. The MSV Log Book is the key element governing the scheme as it will clearly identify the vehicle. All Log Book entries will be entered in a computerised data-base allowing for extensive monitoring to ensure compliance. The MSV Log Book will cost between RM200 and RM500. 

Exempt vehicles can only be imported by competitors holding a Competition Licence or a Team holding an Entrants Licence issued by MAM. General import for later sale is not allowed.

General Exemptions, Go Karts, Bikes, Tyres and Safety Apparel 

Go karts, mini bikes, motocross bikes and certain other bikes will not need a MSV Log Book as they cannot be used for anything but motor sport competition. Bikes which can be potentially used on the road will require a MSV Log Book.

Tyres and safety apparel also enjoy general exemption.

Importers and local manufacturers are allowed to import and sell the above items duty/excise/sales tax free directly to competitors and teams holding valid MAM licenses without the competitors and/or teams first obtaining an exempt permit from MAM. The Sellers will report the sale to MAM monthly. Companies wishing to sell the items must first obtain approval from MAM to do so. Approved companies must enter into an agreement with MAM for the operation and compliance with the scheme.

Components and Spare Parts

Only competitors and teams are allowed to import components and parts for their own use. No importation for sale over the counter is allowed. This is simply to ensure compliance. MAM will closely monitor that components and parts are used for their intended purpose and not sold for use in private vehicles. Competitors also using their vehicles for private use will not qualify for exemption.

If you own a vehicle which is already used for competition, with or without duty and taxes paid, it will still qualify under the scheme provided that it is used for competition only. For example, a competitor owning an older road registered rally car which is only used for competition (and not as a private car whatsoever) will be allowed to import parts and components or purchase locally manufactured parts and components duty/tax free. However, a MSV Log Book must first be obtained from MAM.

COMPLIANCE

The Ministry of Finance and Ministry of International Trade and Industry can revoke the scheme anytime if it is abused. Therefore MAM will have very strict procedures in place. That is why it is necessary to have a MSV Log Book for vehicles which potentially could find their way onto the road. The vehicle will be clearly identified in the Log Book and certain tracing methods will be used.

Components and spare parts for such vehicles could also potentially find their way to places where they shouldn't. Therefore all purchases will be recorded in the Log Book as a means of monitoring parts consumption. 

The consequences of being caught are very severe. Not only will all duties and taxes have to be paid, there will also be huge fines. Vehicles and parts may also be confiscated.

The severity of the consequences is, of course, nothing to worry about if you do the right thing and play by the rules.