28th February 2023 - 2 min read
Deputy Finance Minister II Steven Sim said that the government will provide clear clarification of what constitutes as luxury goods before imposing the luxury goods tax that was proposed during the re-tabling of Budget 2023.
According to the deputy finance minister, some aspects that still needs to be fine-tuned include the definition of luxury goods, the tax rate that will be applied, and the coverage of the tax upon application. “Luxury handbags and luxury watches are some examples. Wait for the announcement. We are working on the timeline,” he said, adding that the tax is set to be implemented this year.
When asked whether the new tax may affect Malaysia as a shopping destination for luxury goods, Sim reassured that the government will hold discussion sessions with industry players and obtain their feedback before deciding on anything. He also acknowledged that the government needs to find a good balance as it seeks to help Malaysia recover economically and remain competitive.
Last Friday, Prime Minister Datuk Seri Anwar Ibrahim – who is also the Finance Minister – had proposed the introduction of the luxury goods tax for branded items as part of the revised Budget 2023. This was done as part of various measures to broaden Malaysia’s tax base.
Several associations subsequently voiced their concerns regarding the negative impact that the new tax may have on Malaysia’s status as a shopping haven, including the Malaysian Association of Tour and Travel Agents (MATTA), Malaysian Shopping Malls Association, and Malaysian Inbound Tourist Association (Mita). They also urged the government to continue providing tax rebates to tourists at the country’s exit points, but with conditions.
Prior to the closing of international borders due to Covid-19, tourism shopping was one of the major revenue contributors to Malaysia’s economy. In 2019, for instance, this segment made up about 33% of the RM86.1 billion gained in tourism receipts.
(Source: Malay Mail)
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