Reports by ALLISON LAI, TEH ATHIRA YUSOF and IMRAN HILMY
PETALING JAYA: The list of taxable goods under the proposed High Value Goods Tax (HVGT) should be made available soon to avoid confusion among retailers and consumers before it takes effect on May 1.
Tax experts also said the successful implementation of HVGT hinges on comprehensive planning, which should have already started, as well as enforcement.
They said the government must release a detailed list of the taxable items and their thresholds, allowing sufficient time for retailers and consumers to adapt.
Tax consultant Christine Koh said the list of taxed items must be made available at least six months before the implementation as retailers would need to make adjustments.
“This includes updating systems, identifying taxable goods and modifying price tags if necessary,” she said in an interview.
Koh highlighted the need for a comprehensive list to avoid confusion and raised attention to the complexity of drawing the threshold.
“For instance, when levying the HVGT on a car worth RM200,000, it becomes essential to specify if this sum includes import duties, insurance, optional accessories, and whether certain vehicles like electric vehicles or special-need vehicles qualify for exemption.”
Besides luxury timepieces, Koh proposed that luxury bags also be included for now, and works of art, antiques and collectibles later.
However, she called for caution when it came to categorising jewellery which is bought for customary purposes, such as gold for weddings or births, and that not all jewellery purchases are made by the wealthy.
“So it’s not fair to include all jewellery as high-value goods,” she said.
When asked about possible loopholes where consumers may avoid being taxed by purchasing overseas or online, Koh said Malaysia already has rules in place to govern overseas and online purchases.
“Our current tax system does impose a tax on importation. That’s why we have Customs checks when we return from overseas.
“Even online purchases are subject to Customs declaration and taxes may be imposed.
“The issue is how strict will enforcement be,” she said.
Despite the anticipated increase in tax collection, Koh said the HVGT falls short in broadening the country’s tax base.
Recognising the government’s efforts to expand the tax base through measures like the HVGT, capital gains tax and an 8% increase in service tax, Koh said she considers these measures temporary.
“Malaysia will eventually reintroduce the goods and services tax (GST) to address long-term tax collection challenges,” she said.
On Nov 2, Prime Minister Datuk Seri Anwar Ibrahim said the HVGT will be implemented on May 1 and the Finance Ministry is in the final stages of finalising the policy and its legal aspects.
The Star recently reported that HVGT is expected to be imposed on big-ticket items such as private jets, yachts, jewellery and luxury cars.
It was learnt there will also be thresholds for these luxury items to be taxed, such as cars sold for more than RM200,000, watches priced more than RM20,000 and jewellery worth RM10,000 and above.
The items and thresholds were listed in a guideline provided by the Finance Ministry for industries to give their feedback.
Malaysia University of Science and Technology lecturer Prof Dr Geoffrey Williams said that high-value goods principally include anything that is status-oriented or branded that signify wealth.
“This includes jewellery, apparel, eyewear, leather goods, watches, footwear and cosmetics.
“The scope could potentially extend to high-end restaurants, hotels and even electric vehicles,” he said.
Prof Williams noted that when gold is sold as bullion or coins, it would be an investment and should have different tax treatment.
With the transition from the previous luxury goods tax to the current HVGT, he said the new term allows for future expansion, as it is not limited to luxury and branded goods.
Prof Williams said the government should release a list of taxable high-value goods to prevent early purchases to avoid the tax.
“However, the exclusion of tourists from paying such tax would reduce revenue.”
He called for the HVGT to be implemented at points of sale, similar to the current sales and services tax (SST).
“If there is a plan to exclude tourists, they would need to present their passports when making purchases or reclaiming tax at the airport,” he added.
