SST

by AKMAR ANNUAR

THE government has decided not to proceed with the implementation of the High-value Goods Tax (HVGT), Prime Minister Datuk Seri Anwar Ibrahim said in a written parliamentary reply on July 29.

Anwar, who also serves as finance minister, explained that the decision follows the expansion of the Sales and Service Tax (SST) to a new structure ranging between 5% and 10%, which already covers luxury and discretionary goods.

“The government has decided not to proceed with the implementation of the HVGT, but the principles behind the taxes have been implemented in the recently reviewed sales taxes, where luxury goods and discretionary items are already taxed at either 5% or 10%,” he said.

The revised SST is expected to generate RM5 billion in revenue this year, with the figure anticipated to double to RM10 billion in 2026, Anwar added.

He was responding to a question from Jempol MP Shamshulkahar Deli, who had asked for an update on several proposed tax measures — including the HVGT, Digital Tax, Capital Gains Tax (CGT), Low-value Goods Tax (LVGT) and SST — as well as the rationale behind upcoming subsidy rationalisation efforts.

Addressing the LVGT, Anwar said the measure, which came into force in 2023, had already generated RM500 million in revenue for 2024. The service tax on digital services, which has been in effect since 2020, contributed RM1.6 billion to the government’s coffers this year.

He also said the CGT, introduced in March 2024, is projected to yield RM800 million annually.

The HVGT was first proposed in the tabling of Budget 2024, with an initial implementation target of May 1. However, Anwar said the government opted to postpone its rollout to allow more time to refine the policy framework and supporting legislation.

He said the delay was necessary to ensure that the tax could be introduced in a manner that is “orderly, efficient and aligned with international best practices”.

“The government took the view that more time was needed to finalise the details and ensure the policy could be implemented effectively,” he said.

In December 2023, Pasir Mas MP Ahmad Fadhli Shaari had raised a similar query on the HVGT, while civil society groups such as the Malaysian United Democratic Alliance (MUDA) criticised the delay — questioning the perceived imbalance in enforcement between taxes targeting ordinary citizens and those aimed at high-income groups.

The post Govt drops High-value Goods Tax, opts for SST expansion appeared first on The Malaysian Reserve.