Tuesday 23 Jul 2024
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KUALA LUMPUR (March 28): Despite eager anticipation within the business community for details on the high-value goods tax (HVGT), the Ministry of Finance (MOF) did not introduce the HVGT Bill in the current session of Parliament as was originally planned. 

Parliament adjourned on Wednesday and will reconvene from June 24 to July 18.

As a result, the implementation of HVGT will no longer take place on May 1, which was the date proposed during the Budget 2024 speech.

“It looks like it [not implemented on May 1] will be the case,” agrees a tax consultant following the matter.

HVGT, previously known as the luxury goods tax, was first announced in the revised Budget 2023 tabled in February last year, with a tax rate expected to range from 5% to 10%.

Since the tabling of Budget 2024, details have been scarce. MOF has remained mum on the criteria for which such goods will be subject to tax and have yet to announce the types of luxury items which would fall under the said tax, except for jewellery and watches that were mentioned in the budget speech. 

In a written parliamentary reply on Feb 29, MOF stated that the bill related to the proposed HVGT would be tabled in the parliamentary session that had just concluded, with proposed legislation to take effect on May 1 if approved.

The government anticipates generating an additional RM700 million annually from HVGT.

Sources say that the hold-up in the bill has been due to disagreement on the definition of “high-value goods” as well as the price range of the items subject to the tax, despite ongoing dialogues and consultations with retail industry players and the tax fraternity.

“There were some consultations and discussions done but then there was no news following that,” said a person privy to the discussions.

This lack of clarity has left retailers in a lurch for over a year.

Jewellers especially have been vocal about the tax, with many saying that a threshold that is too low would be damaging to the industry. They have also said that many of their customers are mostly folks from the working class who save up to purchase items like gold and jewellery as investment or celebratory purposes.

The Malaysia Gold Association (MGA) had recently proposed a higher threshold of RM50,000 and a 5% tax rate for gold jewellery under the HVGT implementation.

Edited ByEsther Lee
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