KUALA LUMPUR (Oct 13): The Malaysian government is planning to raise the sales and service tax (SST) to 8%, from 6% at present, as part of efforts to increase revenue, said Prime Minister Datuk Seri Anwar Ibrahim.

The government is also slated to enforce the capital gains tax (CGT) on sale of unlisted shares at a 10% rate beginning March 1 next year, Anwar said when tabling Budget 2024 in the Dewan Rakyat here on Friday.

Furthermore, the Luxury Goods Tax will be set at 5%-10%, Anwar said. New legislation will be tabled in relation to the imposition of the new tax, which will be imposed on items such as jewellery and watches beyond a certain price threshold.

The higher SST rate was announced amid the government’s reluctance to reimpose the goods and services tax (GST) — which saw higher revenue collection compared to the SST when it was enforced in 2015-2018 — citing concerns over its impact on lower income households.

Aside from the higher rate, the scope of the SST will also be widened to include logistics services, brokerage and underwriting, as well as karaoke.

“However, to ensure it does not burden the people, the increase will not include services like food and beverages (F&B) and telecommunications,” Anwar said.

On the CGT, Anwar reiterated that the government is also considering exemption towards share transactions tied to initial public offerings, internal reorganisations and venture capital, contingent on certain terms and conditions.

The CGT and Luxury Goods Tax were first announced by Anwar in the revised Budget 2023 in February this year.

CGT is imposed in several countries in Southeast Asia, including Thailand (20%), Indonesia (22%), Vietnam (20%), Cambodia (20%) and Myanmar (10% for non-oil and gas sector).

In his speech, Anwar said the government will also impose a global minimum tax by 2025, targeting companies with global income exceeding €750 million (RM3.76 billion) per annum.

“Malaysia must keep up with international tax standards, especially in curbing the erosion of tax activities and transfer of profits to countries with low tax rates,” he said.

Meanwhile, to support high growth-high value (HGHV) sectors, the government intends to provide tiered reinvestment tax incentives in the form of investment tax allowance amounting to 70% of 100%.

According to the 12th Malaysia Plan mid-term review, sectors described under the high growth-high value category include electrical and electronics (E&E), digital and technology-based industries, agriculture, and rare-earths.

“It will entice companies to generate economic growth through investments in high growth-high value sectors, and thus create new economic clusters, widen domestic networks, and balance economic and environmental sustainability,” Anwar said.

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