KUALA LUMPUR, Feb 29 — The government is expected to collect tax revenue of RM700 million a year from the implementation of the Luxury Goods Tax, now known as the High Value Goods Tax (HVGT).
The Ministry of Finance (MoF) said on the Parliament’s website today that the bill on HVGT has been proposed to be tabled in the current Parliament session.
“If the legislation is approved, it is proposed to come into force on May 1, 2024,” said the ministry in response to a question from Tebrau MP Jimmy Puah Wee Tse who wanted to know the expected amount of income obtained as a result of the implementation of HVGT and the date of its implementation.
Meanwhile, on the Low Value Goods Tax (LVGT), the government expects a revenue collection of RM200 million for the first year of implementation.
The LVGT started on January 1, 2024, where consumers who buy goods from overseas online worth RM500 and below will be charged sales tax at a rate of 10 per cent.
“Currently, a total of 52 companies have registered with the Royal Malaysian Customs Department.
“Through the imposition of this sales tax, it is expected to close the price gap between local and foreign products which in turn can benefit local product manufacturers,” said the MoF in response to a question by Datuk Seri Wee Ka Siong (BN-Ayer Hitam) who asked how LVGT can protect local traders.
Meanwhile, in response to a question from William Leong Jee Keen (PH-Selayang), who asked whether the government plans to lower the corporate income tax rate in a “race to the bottom” with regional countries, the MoF said a tax rate reduction without collection from new sustainable revenue sources such as a consumption tax is not suitable to be implemented at this time as it will affect the country’s fiscal position.
Accordingly, through Budget 2024, the government announced the implementation of the Global Minimum Tax (GMT) at a rate of 15 per cent from 2025 in line with Malaysia’s commitment to international taxation standards. The GMT will be implemented on multinational companies that have an annual global revenue of at least 750 million euros and have at least one subsidiary operating in a different country.
“The implementation of GMT is expected to have a positive impact on the country, with the ability to attract new and maintain existing investments by multinational companies, as well as assuring investors regarding the country’s planning in implementing GMT,” it said.
— Bernama
