The Customs Department has clarified that the sales and services tax (SST) exemption for passenger vehicles only applies to manufacturers and not buyers.

"We want to clarify that passenger vehicles are to be taxed.

"The items exempted from sales tax in the list (of tax-exempt goods) refers only to knocked down components for the assembly of completely knocked down (CKD) vehicles only.

"Once a vehicle has been assembled from the imported CKD parts, the completed vehicle is subject to sales tax," Customs director-general T Subromaniam said.

Malaysiakini had reported that cars will be exempt from the SST once the tax comes into force on Sept 1.

This was based on a list of proposed exempted goods published by the Customs Department this morning.

The details regarding passenger vehicles were listed under item 87.03 on page 269, which was entitled: "Motor cars and other motor vehicles principally designed for the transport of persons (other than those under heading 87.02), including station wagons and racing cars" as can be seen below.