The government has decided not to continue the implementation of the Luxury Goods Tax (HVGT) as previously announced, instead opting to strengthen the existing taxation system through the expansion of the Sales and Services Tax (SST).
According to a written reply by Finance Minister II, Datuk Seri Amir Hamzah Azizan in the Dewan Rakyat yesterday, the basic principles of the HVGT have been absorbed into the new SST structure, with luxury and non-essential goods now taxed at a higher rate of 5% or 10%.
The move is expected to contribute an additional revenue of RM5 billion this year, following the SST expansion starting July 1, with collections expected to double to RM10 billion by 2026.
In addition, the targeted diesel subsidy program has saved the government up to RM600 million per month. The Low Value Goods Tax (LVG) which came into effect on January 1 has contributed around RM500 million in revenue so far.
Meanwhile, the Service Tax on Digital Services (SToDS) continues to be a significant contributor with RM1.6 billion in revenue for 2024, while the Capital Gains Tax (CGT) which was implemented on 1 March 2024 is expected to contribute around RM800 million per year.
The government also confirmed that there are no plans to introduce a new digital tax as digital services have already been taxed through SToDS since 2020.
