HVGT Delayed, Car Prices In Malaysia Remain As Is

Implementation of the proposed High-Value Good Tax (HVGT) scheme has been delayed, perhaps standing as a welcomed relief for the bulk of luxury car brands in Malaysia too.

The implementation of the High-Value Goods Tax (HVGT) has been delayed due to the postponement by the Ministry of Finance (MOF) in presenting the bill to Parliament, reports multiple local major news outlets.

The tax, previously known as the Luxury Goods Tax, was initially slated to be tabled during the recently concluded parliamentary session. The proposed legislation was set to take effect on May 1 onwards once approved. Dewan Rakyat will reconvene only from June 24 to July 18.

The bill was first announced in the revised 2023 Budget tabled in Feb last year and is expected to range from 5% to 10%. Through which, the government reportedly seeks to generate an annual tax revenue of RM700 million by implementing this tax.

Had the implementation proceeded as initially planned, it was widely tipped to see luxury cars priced upwards from RM200,000 experience major price hikes - between 5% to 10%.

The HVGT scheme’s delayed implementation reportedly stem from disagreements over the definition of "high-value goods”, as well as the price range of items subject to the tax despite consultations and dialogues with key retail industry players and tax professionals alike.

The initial proposal by the MOF had suggested for cars to be included in the HVGT scheme. The ministry even proposed  luxury cars should have a threshold price of above RM 200,000 to be taxed.

The HVGT scheme is expected to be implemented once MOF presents their bill in parliament, which is slated to reconvene from June 24 until July 18.

Despite this, most major brands we spoke to that offer high-end products set to be affected by this new tax indicated that they had no knowledge on this matter presently. In other words, it appears that car prices in Malaysia will remain as is until further notice.

Separately, the MOF had revealed earlier this month that it was in the final stages of crafting policies related to the new HVGT scheme. The ministry adds that it was applying careful consideration to ensure said scheme’s policies does not adversely impact low-income groups.

Source: The Edge