# Excise Duty in Malaysia: Cars, Alcohol, Cigarettes and Sugary Drinks

> Excise duty is a tax imposed on selected goods such as motor vehicles, alcohol, cigarettes and sugary drinks in Malaysia. It is governed by the Excise Act 1976 and collected by the Royal Malaysian Customs Department.

- Category: taxation
- Language: en
- Status: published
- Updated: 2026-08-14
- Canonical: https://negaraku.md/en/taxation/excise-duty

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Buy a car in Malaysia and you may end up paying tax that nearly equals the price of the car itself. The main culprit is a tax that is rarely discussed but extremely powerful: **excise duty**.

Excise duty is a domestic tax imposed on selected goods considered luxury, unhealthy, or potentially burdensome to the public healthcare system. It is not a general tax like Sales Tax — it targets only a handful of categories: motor vehicles, liquor, cigarettes and vapes, sugary drinks, premix preparations, and playing cards and mahjong tiles.

## What is excise duty and who collects it?

Excise duty is provided for under the **Excise Act 1976** and enforced by the **Royal Malaysian Customs Department (RMCD)**. Unlike import duty, which is imposed at the border, excise duty is imposed on goods manufactured domestically as well as those imported.

In general, excise duty becomes chargeable when goods are manufactured, and payable when the goods leave the licensed manufacturer's premises — or at the time of importation for goods from abroad. For this reason, manufacturers of excise goods such as breweries or vehicle assemblers must hold an excise licence and keep their goods under customs control until the duty is settled.

Duty rates are calculated in two forms:

- **Ad valorem** — a percentage of the value of the goods (for example 75% for small cars).
- **Specific** — a fixed amount per unit (for example 90 sen per litre of sugary drinks, or 47 sen per 100 grams of premix preparations).

Some goods such as hard liquor use a **composite rate** — a combination of a fixed rate and a percentage.

## How much is the excise duty on cars?

Motor vehicles are the largest source of excise duty in Malaysia, and the main reason car prices here are high. For passenger cars (saloons), excise duty is calculated on an ad valorem basis according to engine capacity:

| Engine capacity | Excise duty rate (passenger cars) |
|---|---|
| Below 1,800cc | 75% |
| 1,800–1,999cc | 80% |
| 2,000–2,499cc | 90% |
| 2,500cc and above | 105% |

The rate schedule above is documented for locally assembled cars (CKD, *completely knocked-down*). Fully imported cars (CBU, *completely built-up*) bear the same excise rate — the difference is that CBU cars are also charged import duty on top. All rates are calculated on the duty-paid value.

What makes cars expensive is the **stacking effect** of three layers of tax. For a CBU car imported from outside ASEAN, the sequence is as follows:

1. **Import duty** is imposed first — 30% for CBU cars from outside ASEAN (cars from ASEAN countries enjoy 0% under the ASEAN agreement). This rate depends on free-trade agreements; for example, certain electric vehicles from China enjoy an import rate as low as 5% under ACFTA.
2. **Excise duty** is calculated on the *duty-paid value* (that is, the base price plus import duty).
3. **Sales tax of 10%** is imposed last, on top of the amount that already includes excise.

Because each layer is calculated on top of an amount already inflated by the previous layer, an imported car can end up costing more than double its original price. By contrast, CKD cars assembled domestically are usually exempt from import duty on their components, so they bear only excise and sales tax — which is why locally made cars are cheaper.

## How much is the excise duty on alcohol and cigarettes?

Alcohol and tobacco are classic excise goods — "sin taxes" that raise prices while helping to fund public-health costs. Below are some rates for guidance (absolute figures for certain liquor and tobacco should be checked with RMCD):

| Product | Excise duty rate |
|---|---|
| Beer / stout | RM175.00 per litre (100% volume) + 15% ad valorem (composite) |
| Wine | RM450 per litre |
| Hard liquor / spirits | RM1.10 per litre + 15% (composite) |
| Vodka | RM150 per litre (100% volume) |
| Sake | RM60 per litre (100% volume) |
| Cigarettes | RM0.42 per stick (effective 1 November 2025) |
| Cigars / cheroots / cigarillos | RM440 per kilogram |
| Heated tobacco products | RM798 per kilogram |
| Chewing tobacco | 5% + RM27 per kilogram |

Through Budget 2026, several rates were raised effective 1 November 2025: cigarettes rose 2 sen per stick (from RM0.40 to RM0.42), alcohol excise duty was raised 10% across the board, heated tobacco products rose RM20 per kilogram, and cigars rose RM40 per kilogram. Chewing tobacco, meanwhile, was introduced as a new excise category through Budget 2024.

## What about the sugary drinks tax?

The excise duty on sugar-sweetened beverages (SSB) is among the youngest excise taxes in Malaysia, introduced on 1 July 2019 as part of the Ministry of Health's "War Against Sugar" effort. The threshold differs by category rather than being a single uniform one: ready-to-drink beverages under HS 2202 are dutiable if they exceed 5 grams of sugar per 100ml; milk-based drinks (also HS 2202) if they exceed 7 grams of sugar per 100ml; and fruit or vegetable juices under HS 2009 if they exceed 12 grams of sugar per 100ml.

The rate was raised twice in succession:

| Effective date | Rate |
|---|---|
| 1 July 2019 | 40 sen per litre |
| 1 January 2024 | 50 sen per litre |
| 1 January 2025 | 90 sen per litre |

The increase to 90 sen per litre — an 80% jump from 50 sen — was announced in Budget 2025. The effect was quite significant: the government collected **RM73.81 million** in SSB excise duty between January and November 2025 alone, contributing to total collections of **RM521.35 million** since the tax began in 2019. Of the 2025 collection, RM25 million was channelled to the Ministry of Health for advocacy programmes, SGLT-2 medication for diabetic patients, and peritoneal dialysis facilities for end-stage kidney patients.

Besides sugary drinks, premix preparations such as 3-in-1 instant coffee and tea are also charged excise duty of 47 sen per 100 grams, effective 1 March 2024 under the Excise Duties (Amendment) Order 2024.

## Other goods subject to excise duty

The list of excise goods is longer than one might expect. Besides cars, alcohol, cigarettes and sugary drinks, the following categories are also subject to it:

- **Other vehicles** — motorcycles, mopeds (20%), and all-terrain vehicles/ATVs (65%).
- **Sparkling wine** — RM450 per litre (100% volume).
- **Playing cards** — 10% ad valorem.
- **Mahjong tiles** — 10% ad valorem.

Gambling goods such as playing cards and mahjong tiles remain on the excise list for historical and social reasons, even though their collection is small compared with cars and tobacco.

## What's next

Excise duty makes up a large part of the price you pay for cars, liquor, cigarettes and sweet drinks — and the rates are frequently amended during the annual budget presentation in October. Before buying a high-value item such as an imported car, check the current rates on the official RMCD website, as figures can change from year to year.

For a thorough understanding of taxes in Malaysia, also read our articles on **Sales and Service Tax (SST)** and **import duty**, as all three often stack on the same goods. For manufacturers and importers, refer to the **Royal Malaysian Customs Department** for excise licensing and compliance requirements.

*Note: This article is an AI-generated draft and has not been reviewed by a tax expert. Rates and effective dates may change — verify current figures with official sources before making financial decisions.*

## Sources

- Excise Duties in Malaysia — Doing Business in Malaysia — https://www.aseanbriefing.com/doing-business-guide/malaysia/taxation-and-accounting/excise-duties-malaysia (ASEAN Briefing (Dezan Shira & Associates))
- A Complete Guide to Excise Duty in Malaysia: Rates, Rules & Exemptions — https://accounting.my/tax/excise-duty-in-malaysia/ (Accounting.my)
- Excise Act 1976 — Laws of Malaysia — https://www.investmalaysia.gov.my/media/1iuhkt1u/excise-act-1976.pdf (Malaysian Investment Development Authority (MIDA))
- Excise Duties (Amendment) Order 2024 — https://ccs-co.com/post/excise-duties-amendment-order-2024/ (CCS & Co (Chartered Accountants))
- Introduction to Malaysian Sugar Tax — https://www.azmilaw.com/insights/introduction-to-malaysian-sugar-tax/ (Azmi & Associates)
- Tax and duties for CBU EVs set at 30%+10%+10% or 5%+10%+10% depending on country of origin, FTA — https://paultan.org/2026/01/20/tax-and-duties-for-cbu-evs-set-at-301010-or-51010-depending-on-country-of-origin-fta/ (Paul Tan's Automotive News)
- Malaysia: Duties & Taxes on Motor Vehicles — https://www.maa.org.my/pdf/malaysia_duties_taxes_on_motor_vehicles.pdf (Malaysian Automotive Association (MAA))
- Sugary drink tax to be raised to 90 sen per litre next year, from 50 sen now — https://theedgemalaysia.com/node/730731 (The Edge Malaysia)
- RM73.81mil in sugar tax collected from Jan-Nov, says Finance Ministry — https://www.thestar.com.my/news/nation/2025/11/25/rm7381mil-in-sugar-tax-collected-from-jan-nov-says-finance-ministry (The Star)
- Budget 2024: New Chewing Tobacco Tax, Sugary Drinks Tax Raise — https://codeblue.galencentre.org/2023/10/budget-2024-new-chewing-tobacco-tax-sugary-drinks-tax-raise/ (CodeBlue (Galen Centre))
- Import duty for China EVs is only 5%: Up to 30% for CBU EVs from other countries — https://soyacincau.com/2026/01/20/new-tax-rate-for-cbu-ev-confirmed/ (SoyaCincau)
- Malaysia - Corporate - Other taxes — https://taxsummaries.pwc.com/malaysia/corporate/other-taxes (PwC Worldwide Tax Summaries)
- Malaysia imposes excise duty on premix preparations — https://taxnews.ey.com/news/2022-1616-malaysia-imposes-excise-duty-on-premix-preparations (EY Tax News)
- Expansion of Scope for Excise Duty on Sugar Sweetened Beverages — https://www.dossnett-customs.com.my/expansion-of-scope-for-excise-duty-on-sugar-sweetened-beverages/ (Dossnett Customs Consultancy)
- Malaysia - Policies, Interventions and Actions — https://data.worldobesity.org/country/malaysia-130/actions.pdf (World Obesity Federation)
- Minuman Keras - MyExcise — https://myexcise.customs.gov.my/myexcise/services/minuman-keras/ (Royal Malaysian Customs Department (RMCD))
- Excise duties on tobacco products, alcoholic beverages to be increased — https://theedgemalaysia.com/node/773609 (The Edge Malaysia)
- Budget 2026: Cigarette And Alcohol Tax Hikes, Revenue Earmarked For Health — https://codeblue.galencentre.org/2025/10/budget-2026-cigarette-and-alcohol-tax-hikes-revenue-earmarked-for-health/ (CodeBlue (Galen Centre))
- RM73.81 Mln In Excise Duty On Sugar-Sweetened Beverages Collected From Jan To Nov 2025 - MoF — https://www.bernama.com/en/news.php?id=2494767 (Bernama)

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