KUALA LUMPUR, Feb 27 — Putrajaya will provide a clear definition of luxury goods before imposing tax on them as proposed in the retabled Budget 2023 this year, according to Deputy Finance Minister Steven Sim Chee Keong.
The luxury goods tax will be implemented this year once the definition, rate and coverage has been fine-tuned, he told the New Straits Times in a report published today.
“Luxury handbags and luxury watches are some examples. Wait for the announcement. We are working on the timeline,” he was quoted as saying.
He was also asked if the new tax will affect Malaysia as a shopping destination for luxury goods.
He gave an assurance that the government will seek feedback from those in the industry and ensure balance even as it seeks to make Malaysia economically competitive.
Prime Minister Datuk Seri Anwar Ibrahim who is also the finance minister had proposed a luxury tax for items such as branded watches and fashion items starting this year when he retabled the Budget, as part of measures to broaden Malaysia’s tax base.
Representatives from the retailers and tourism and travel industries have urged the government to rethink the new tax at this point, when Malaysia is competing with its South-east Asian neighbours to draw foreign visitors to boost the economy.
Foreign tourist spending on shopping was a major revenue earner before Covid-19 forced international borders shut, making up some 33 per cent of the RM86.1 billion in tourism receipts in 2019.
