Customs to curb abuses on duty-free cars

PETALING JAYA: The Royal Malaysian Customs Department is announcing measures to tighten duty treatment on imported vehicles in the duty-free islands of Langkawi and Labuan to curtail abuses which have led to millions in revenue losses.
"We are studying various regulations and guidelines. It should not take more than three months," Customs Department director-general Datuk Seri Khazali Ahmad told theSun.
In announcing the revised 2016 Budget, Prime Minister Datuk Seri Najib Razak said the free duty treatment on such vehicles in the two islands would be tightened but would not affect locals residing there.
Currently, Clause 21A of the Customs Duty Order (Exemption) 1988 allows for imported vehicles to duty-free islands to be brought onto the mainland for not more than 30 days in a single trip, and not more than 90 days per year.
Current practice, however, sees many luxury cars from Langkawi never returning after leaving the island, said Khazali.
"The current system has been abused by some quarters who owe millions in unpaid duties. To curtail this, we are reviewing the tax free status (of imported vehicles) for Langkawi," he said.
Currently, offenders can be fined up to 20 times the value of their vehicles or face three years' jail, or both, upon conviction.
In 2014, the Labuan Royal Customs and Excise Department and the Road Transport Department (JPJ) introduced the e-Vehicle system to monitor Labuan-registered vehicles' movements, namely those with unsettled compounds, summonses and taxes, as well as those which have overstayed their allowed 90 days per year outside the island.
The e-Vehicle system is used to trace errant motorists and tax defaulters, who will be prevented from leaving the duty-free island.
Duty-free vehicles can be as much as 40% cheaper compared to those on the mainland. The government rakes in taxes and duties for every imported car sold in the country.
Over the years, there has been a spike in the volume of luxury cars being sold in Langkawi and Labuan. This matter came to light after a number of such cars were seized elsewhere for unpaid duties and taxes.
Luxuries cars registered in Langkawi and Labuan and seized on the mainland were worth millions, due to the unpaid duties and taxes. The models included Ferraris, Lamborghinis, Bentleys, Rolls-Royces and Porsches.
These cars were registered with false local addresses with the JPJ of the duty-free islands and then brought to the "principal customs area" to obtain permission to be driven on the mainland for 90 days. But they were never returned to the islands. (Areas outside of Langkawi and Labuan are known as principal customs areas.)
Cars from Langkawi bear the original number plates of KV while those from Labuan display the letters LE. A special plate, G1M (Gagasan 1Malaysia), is for cars registered in the Federal Territory but can be registered for Langkawi cars as well.