By Danial Dzulkifly
SHAH ALAM, July 30 — The federal government has decided to scrap the previously proposed high-value goods tax (HVGT), Finance Minister Datuk Seri Anwar Ibrahim said in a written parliamentary reply yesterday.
Anwar, who is also prime minister, said in response to a question by Jempol MP Datuk Shamshulkahar Mohd Deli that the government will not proceed with the tax as a standalone measure.
This is as the underlying principle of the tax was absorbed into the recently updated Sales and Service Tax (SST), which now imposes higher rates of 5 or 10 per cent on luxury and discretionary items.
Initially announced during the revised Budget 2023, the HVGT was meant to apply to luxury items such as jewellery and watches above a certain price threshold, and was set to generate an additional RM700 million in annual revenue for the government.
However, the proposal drew concerns from tourism and retail sectors about potential negative impacts on Malaysia’s luxury goods market.
The updated SST framework, which came into effect on July 1, is expected to boost federal revenue by RM5 billion this year and up to RM10 billion next year, as it captures a larger range of goods and services.
In his reply, Anwar shared early gains from other fiscal reforms, such as the Capital Gains Tax that was introduced in March last year on unlisted share transactions, which is expected to bring in RM800 million annually.
He said the Service Tax on digital services generated RM1.6 billion in revenue last year, while the Low-Value Goods Tax, implemented in January last year, contributed RM500 million in 2024.
Meanwhile, the rationalisation of diesel subsidies has helped save RM600 million each month, Anwar added.
