Govt scraps plan to impose luxury goods tax

The Star

30-07-2025

KUALA LUMPUR: The government has decided not to proceed with its implementation of the proposed high-value goods tax (HVGT), says Datuk Seri Anwar Ibrahim.
The Prime Minister said, however, the underlying principle has been incorporated into the revised sales tax framework, with luxury and discretionary items now taxed at either 5% or 10%.
Anwar further noted that the newly implemented low-value goods (LVG) tax, effective from Jan 1, 2024, has brought in around RM500mil in revenue this year.
He said the government's latest review of the sales tax rate and expansion of the service tax scope, which came into effect on July 1, is expected to increase national revenue by RM5bil this year and double to RM10bil in 2026.
In a written parliamentary reply on Tuesday (July 29), Anwar, who is also the Finance Minister, said the ongoing diesel subsidy rationalisation has resulted in savings of up to RM600mil a month for the Federal Government.
He added that other fiscal reform measures have contributed significantly to strengthening national revenue, including the implementation of the Capital Gains Tax (CGT) on unlisted shares, which took effect on March 1, 2024.
'Based on the current volume and value of transactions involving unlisted shares, the government estimates revenue collection at around RM800mil annually.
'However, actual figures will only be confirmed after corporate taxpayers submit their annual income tax returns,' he said.
Anwar clarified that while a digital goods tax (DGT) has not been introduced, a service tax on digital services (StoDS) has been in place since Jan 1, 2020.
This tax, levied on digital service providers offering or subscribing services online or through other electronic networks, has generated RM1.6bil in revenue so far in 2024, Anwar added.