Published on June 11th, 2022 | by Daniel Sherman Fernandez0
How To Buy A Tax Free Luxury Car In Malaysia
Any luxury super sedan or sports car that you have dreamed of owning.
We explain how to get your premium luxury car without paying the premium price in Malaysia. It is well known fact that Langkawi and Labuan islands have been accorded tax-free islands for some time now. Labuan, off the coast of Sabah has been a haven for Japanese Domestic Models (JDM) for the longest time and after a few years these rare machines end up on mainland Sabah and even Sarawak. Having a naval base in Labuan also stimulated the sales of these cars from young naval officers with ample finances.
Now, in Langkawi which is off the coast of Kedah the situation is rather different. Here you will find the exotic European luxury supercars parked in the many warehouses and sometimes, rather sadly under an atap/zinc roof next to a villager’s house.
For the first time foreign tourists visiting Langkawi, their first impression riding a rented scooter along the back roads of the island will have them thinking that the locals are all super rich. Maserati’s, Jaguar’s, BMW’s and many Mercedes-Benz sedans can be seen parked with thick dust coating their pristine factory paint. This is only the tip of the iceberg. Venture further nearer to the airport or the commercial wharf and you will find small guarded warehouses. Inside, away from prying eyes are the exotic Italian, English and German machines parked and waiting for their Peninsula mainland owners who are evading hundreds of thousands of Ringgit in import taxes.
This is the method.
Take for example a brand new McLaren GT. Estimated tax free price at launch in November 2019 was RM908,000 before any import taxes and options were included. Buy this car brand new, pay about RM150,000 deposit (cash) and the rest will be a new car loan that will be arranged by the dealer. Now, the import tax on a brand new car like this will be about RM1.2 million or so. So, now you pay just RM150k and the remainder tax free amount of about RM758,000 will be on monthly installments over a few years.
You then get the car shipped to Langkawi to be stored at a warehouse that has been pre-arranged by the dealer, or if you have contacts then you can use your own warehouse on the island. The transportation of your new supercar by trailer to Langkawi will be about RM4,000-RM6,000 which includes ferry charges across and also insurance.
Storage charges for a year differ according to the quality and reliability of the warehouse owner. Some charge RM300.00 a month and others as high as RM1,200.00 a month.
Now here comes the best part. While your McLaren is being stored you can still drive it, as long as you have full road tax and insurance running. For a maximum of 90 days in a year, you can bring that McLaren back to Kedah and drive it around the country, in Klang Valley, in Penang, around Kota Bahru and even down south to Kota Tinggi without any worries, but for a maximum of 90 days only in one calendar year.
The cost to transport the car across to Kedah is about RM420.00 which includes insurance and ferry charges. You can fly into Langkawi and make the arrangements over a day while enjoying a beach holiday with your other half. Then arrive in Kedah and drive back to your home in your tax free McLaren.
You will also need to put a bank guarantee of RM200,000 with the Customs department to bring the car back for 90 days. When you return the car to Langkawi, the RM200,000 bank guarantee will be returned to you.
Now, it is suggested that you do this for 3 years to get the best results. Let us explain.
After ONE (1) year of Langkawi storage your McLaren import car tax will be reduced by 30 per cent. (which is estimated about RM360,000).
After TWO (2) years of Langkawi storage your McLaren import car tax will be reduced by 30 +15 per cent which is a total of 45 per cent. (which is estimated about RM540,000).
After THREE (3) years of Langkawi storage your McLaren import car tax will be reduced by 30 + 15 + another 15 per cent which is a total of 60 per cent. (which is estimated about RM720,000).
So, by the end of the 3rd year you can bring your McLaren back and pay about RM480,000 tax and enjoy driving your supercar. Take note, that over the three years in storage, you have already driven the car 90 days a year, so for 90 days you had the luxury of driving the car in your city while the cars’ tax value is slowly falling.
So, your total investment is about RM1,400.000 give a take a few thousand. However, you can buy a 3-year-old 2017 model McLaren with no mileage from an AP Holder or gray market dealer with all taxes paid and ready for you drive without an issue at only RM1,188,000 before haggling. This is a savings of almost RM300,000 from the above mentioned method of saving tax and a lot less hassle. The choice is yours. The process is easy enough. All you need is a lot of cash money to play this game.