Earlier in the month of October, Prime Minister Datuk Seri Anwar Ibrahim announced that Malaysia would be introducing a brand-new luxury goods tax as part of the nation’s 2024 Budget Proposal. How will it affect prospective luxury consumers locally?
The High-Value Goods Tax will generally apply to high-ticket items that are considered indulgences as well as symbols of wealth and status, in an effort to widen its tax base while narrowing the nation’s deficit. This new tax will apply to excess expenditures such as designer apparel and accessories, high jewelry, fine watches, and other lavish assets including cars, jets, yachts, and real estate.
How will Malaysia’s new luxury goods tax (HVGT) affect you?
It is understood that the new High-Value Goods Tax (HVGT) is expected to be deployed come May 1st, 2024 in a written response addressed to Kampar Member of Parliament Chong Zhemin. According to the correspondence, the government is now in the last stages of finalising the relevant policies and legislation with regard to the tax ahead of its eventual introduction, with feedback obtained from engagement sessions held by both the ministry and the Royal Malaysian Customs Department.
“The implementation mechanism, types of goods, and high-value goods tax rates will be announced as soon as the matter is finalised and approved by the Cabinet,” the ministry added.
With that said, finer details on the specifics of the tax implementation remain largely ambiguous. At this juncture, it is understood that the High-Value Goods Tax is likely to come in at between 5% to 10%. A preliminary guideline has also been issued by the Finance Ministry to the respective industries in order to obtain feedback on its structure.
As reported by The Star, the guideline apparently outlined the thresholds by which the tax will be applied to various different goods, which include cars sold above RM200,000, watches listed at over RM20,000, and fine jewelry pieces costing over RM10,000. The tax is said to only apply to Malaysians and not tourists.
Assuming that the HVGT will not form part of the latest SST increase from 6% to 8%, this will mean that Malaysian luxury consumers are likely to pay up to 18% in tax for certain luxury items.
However, it is worth noting that Malaysia isn’t among the cheapest countries to shop for luxury goods to begin with, owing to other pre-existing excise duties and taxes. Given that fact, the trend of local luxury consumers spending in other parts of Asia such as Singapore and Hong Kong, or in Europe outright, will likely remain the most typical way to cash in on the biggest savings on high-ticket purchases.
Frequently Asked Questions (FAQ)
1. What is the tax on luxury goods?
– Malaysia is set to introduce a new High-Value Goods Tax on luxury purchases starting in May 2024.
– Higher GST amounts may deter luxury consumers from making purchases in a country, and look for other parts of the world that may be more favorable in terms of pricing.
Feature and hero image credits: Skylar Kang/Pexels, Screen Post/Instagram
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Written by
Benjamin Wong
Senior Editor, Fashion and Dining
Armed with an Advertising major from Lancaster University, Benjamin is a senior editor who has spent his time oscillating between the social media and digital media landscape since 2018. With a keen interest in haute fashion and gastronomy, he has written for publications such as ERROR Digital, WORLD OF BUZZ, and KL Foodie. Beyond the keyboard, you can find him arms-deep in a thrift pile.
