Govt Shelves Plan To Introduce High Value Goods Tax

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 Finance minister Anwar Ibrahim says the principle of taxing luxury items has been incorporated into the revised sales tax structure.
Finance minister Anwar Ibrahim said in February that the government had put on hold the implementation of the high-value goods tax to prioritise several newly implemented fiscal reforms. (Bernama pic)PETALING JAYA: The government has dropped its plan to roll out a high-value goods tax (HVGT), says finance minister Anwar Ibrahim
In a written parliamentary reply yesterday, Anwar said that while the high-value goods tax would not be implemented, the principle of taxing luxury items had been incorporated into the revised sales tax structure, with luxury and selected goods now subject to rates of either 5% or 10%.
He was responding to Shamsulkahar Deli (BN-Jempol), who asked about the projected increase in national revenue resulting from the implementation of fiscal reform measures.
These reforms include the introduction of the HVGT, digital goods tax (DGT), capital gains tax (CGT), and low-value goods tax (LVG), as well as the expansion of the sales and service tax (SST) and the targeting of subsidies, both ongoing and planned.
Anwar, who is also the prime minister, said in February that the implementation of the HVGT was put on hold as the government needed to prioritise several newly implemented fiscal reforms.
The tax had been slated to come into force on May 1, 2024. It was originally announced in the revised 2023 budget with further details announced a year later.
It aimed to impose a 5% to 10% tax on luxury items and was expected to generate an additional RM700 million in annual revenue.
However, specific details about the tax, including the criteria for taxable goods and the range of items it would cover, had been scant, with only jewellery and watches explicitly mentioned.
Anwar also said yesterday that while the government had not introduced a specific DGT, it had placed it under service tax on digital services (SToDS) since Jan 1, 2020.
“This tax applies to service providers offering or supplying services online or through other electronic networks. In 2024, SToDS generated RM1.6 billion in revenue,” he said.
As for the LGT, which took effect on Jan 1, 2024, Anwar said it contributed approximately RM500 million in revenue for the year.
He said the targeted diesel subsidies had saved the government up to RM600 million per month so far, and reiterated that the expanded SST is expected to generate an additional RM5 billion in revenue this year, doubling to RM10 billion by 2026.
As for the CGT, which came into effect on March 1, 2024, Anwar said the actual amount for any given year of assessment would only be finalised once corporate taxpayers submit their income tax returns for the assessment year in question. - FMT

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