KUALA LUMPUR, MALAYSIA —Malaysia’s Prime Minister and Finance Minister Anwar Ibrahim confirmed that his administration would not implement the Goods and Services Tax (GST) due to high food inflation and low wages.
Instead, the government will introduce a luxury goods tax with a specific value limit, depending on the type of luxury goods.
Anwar said the government intended to take more progressive measures to broaden the tax base of high-income individuals.
“We are proposing introducing the luxury goods tax starting this year with a minimum value depending on the items. Some of the items included are luxury branded watches and branded fashion goods,” said Anwar, who is also Finance Minister, while presenting Budget 2023 in Parliament on 24 February.
However, he did not elaborate further on the taxation mechanism.
He added that the Malaysian government will study the introduction of a Capital Gains Tax for the disposal of unlisted shares by companies from 2024 at a low rate, in accordance with international best practices.
He stressed that the Malaysian government’s commitments include protecting the livelihood of the people, upholding integrity, and improving public and private sector delivery systems.
Anwar emphasized that these commitments could be achieved by following the framework of the Malaysia MADANI concept, which focuses on shaping the nation’s future and realizing its potential through thought, spirituality, and infrastructure.
He added that the government is examining ways to reduce market disruptions and streamline business processes through digitalization. The overarching objective is to ensure that wealth distribution and regional development are equitable and sustainable.
“With the transition to the endemic phase and the reopening of international borders, Malaysia has seen an increase in tourist arrivals as well as trade and business activities, contributing towards a steady recovery, especially in the services sector,” Anwar said.
“Based on the nation’s sound microeconomic fundamentals, the economy is expected to register a growth of approximately 4.5% in 2023. This is further supported by robust domestic demand, coupled with the effective implementation of the 12th Malaysia Plan (12MP).”
As 2023 is expected to be a challenging year, the Prime Minister stated that the government would remain vigilant of economic headwinds and potential geopolitical conflicts. This is to ensure that appropriate strategies and actions can be devised accordingly.