Company Cars & Benefits-in-Kind: What Is Taxable?

What is a benefit-in-kind (BIK)?

A benefit-in-kind (BIK) is a benefit that cannot be converted into money, provided by the employer for the personal enjoyment of the employee, the employee's spouse, family, servants, dependants or guests. The value of the BIK is taken into account as part of the gross employment income under paragraph 13(1)(b) of the Income Tax Act 1967 (ACP 1967).

Source: HASiL — Appendix B3 (BIK); EA & EC Guide Notes 2025; Public Ruling (KU) 5/2019 (see Official sources section).

Perquisite vs BIK: two different tax routes

It is important to distinguish between two types of benefits from employers:

Perquisite — a benefit in cash or convertible into money. It is taxed under paragraph 13(1)(a) ACP.
BIK — a benefit that cannot be converted into money (e.g. a company car for personal use). It is taxed under paragraph 13(1)(b) ACP.

Source: HASiL — Public Ruling (KU) 5/2019; EA & EC Guide Notes 2025 (see Official sources section).

Company cars: two valuation methods

The company-car BIK is valued using one of two methods prescribed by HASiL. Both methods are legally valid — neither is automatically "better"; the method must be applied consistently throughout the period of provision.

1. Fixed value method — uses the official schedule (see table below). A reduction is allowed only if:

(i) the car is provided for a period of less than one year; or
(ii) the car is shared with another employee.

No reduction for business use under this method.

2. Formula method — the annual value is computed as:

Annual value = Cost of asset ÷ Prescribed average lifespan

A reduction is allowed if:

(i) the period provided is less than a year;
(ii) the car is shared; or
(iii) the car is used for the employer's business purposes.

Source: HASiL — Appendix B3 (BIK), valuation methods section (see Official sources section).

Schedule of fixed values for cars and petrol

The following table from HASiL Appendix B3 shows the annual value of the car and petrol benefit based on the cost of a "new" car:

Car Cost (RM)	Benefit (RM)	Petrol (RM)
Up to 50,000	1,200	600
50,001 – 75,000	2,400	900
75,001 – 100,000	3,600	1,200
100,001 – 150,000	5,000	1,500
150,001 – 200,000	7,000	1,800
200,001 – 250,000	9,000	2,100
250,001 – 350,000	15,000	2,400
350,001 – 500,000	21,250	2,700
500,001 and above	25,000	3,000

"Basis of valuation: cost of car = actual price including fixed accessories but excluding financial charges, insurance premiums and road tax at the time the car was new. "Cost of new car" means the actual price at the time it was first registered (including used/reconditioned cars) — do not use the current market price."

Source: HASiL — Appendix B3 (BIK), fixed value schedule (see Official sources section).

Formula method for cars

For cars, the formula method is computed as:

Annual value = Cost of car × 80% ÷ 8 (Prescribed Average Lifespan)

The annual reduction in the value of the car does not apply for cars provided for more than 5 years.
A deduction may be made if the employee pays a sum of money to the employer.

Simple example (from Appendix B3): a car costing RM180,000 → the formula method gives a value of RM18,000/year, while the fixed value for the same cost category is RM9,000/year. (This example shows the two methods can produce different values — the actual valuation depends on which method is applied consistently.)

Source: HASiL — Appendix B3 (BIK), Example 3 (see Official sources section).

Tolls, maintenance and free petrol

Tolls paid by the employer are deemed to have been included in the car BIK value.
Maintenance costs (servicing, repairs, annual road tax, annual insurance premiums) are not treated as part of the employee's benefit.
Free petrol (fuel card/bills paid by the employer) is a BIK and is valued according to the table above.

Source: HASiL — Appendix B3 (BIK) (see Official sources section).

Employer reporting (Form EA/EC)

Employers must report all BIK values in the Statement of Remuneration from Employment (Form EA/EC) and the Employer's Return (Form E). For cars, report the make, year of manufacture, model and the date the car was provided.

Source: HASiL — Appendix B3 (BIK), employer reporting section (see Official sources section).

Exemption does not apply when the employee controls the employer

If the employee receiving the benefit has control over the employer, the exemption does not apply — the benefit remains taxable under paragraph 13(1)(b) ACP.

Source: HASiL — Appendix B3 (BIK) (see Official sources section).

Remember

BIK (not convertible to money) → paragraph 13(1)(b); perquisite (convertible to money) → paragraph 13(1)(a). Do not combine them.
Two valuation methods: fixed value (schedule) or formula (cost × 80% ÷ 8); both are valid.
Fixed value method: no reduction for business use.
Cost of car = actual price at registration (including used cars), excluding financial charges/insurance/road tax.
Tolls are included in the BIK value; maintenance is not; free petrol is valued per the schedule.
Employers report all BIK values in Form EA/EC and Form E.
All amounts are for YA 2025; HASiL has not published the YA 2026 schedule.

Frequently Asked Questions (FAQ)

Q. I was given a company car worth RM120,000. How much is taxable? A. Under the fixed value schedule, the annual car benefit is RM5,000 (car costing RM100,001–RM150,000). If the formula method is used, the value is cost × 80% ÷ 8. The valuation depends on which method is applied consistently.

Q. Can the car's value be reduced because I use it for work? A. Under the fixed value method, no — there is no reduction for business use. Reduction is only for periods under a year or sharing. Under the formula method, the employer's business use allows a reduction.

Q. My employer pays my tolls and car servicing. Is that an additional benefit? A. Tolls are deemed included in the car BIK value; maintenance costs (servicing, road tax, insurance) are not treated as part of the benefit.

Q. I receive free petrol. Is it taxable? A. Yes — free petrol is a BIK and is valued per the schedule (e.g. RM1,500 per year for a car costing RM100,001–RM150,000).

Q. I own the company and gave myself a company car. Same? A. If you have control over the employer, the exemption does not apply — the benefit is taxed under paragraph 13(1)(b). Verify your situation.

Glossary

BIK — benefit-in-kind; a benefit that cannot be converted into money.
Perquisite — a benefit in cash or convertible into money.
ACP 1967 — Income Tax Act 1967.
Form EA/EC — statement of remuneration from employment (employer).
Form E — employer's return.
YA — Year of Assessment.