Malaysia has shelved plans to implement the High-Value Goods Tax (HVGT), but elements of the policy have been integrated into a revised sales tax framework, according to Prime Minister Anwar Ibrahim. The revised model will now apply a 5% or 10% tax rate to luxury items, with the government eyeing broader revenue generation through multiple fiscal reforms.
Speaking in Parliament, the Prime Minister said the move was aimed at streamlining Malaysia’s tax regime, avoiding duplication, and ensuring effective revenue collection without overburdening the public or businesses.
“The High-Value Goods Tax will no longer be introduced as a separate instrument,” Anwar clarified. “Instead, its principles have been absorbed into the expanded Sales and Services Tax (SST) structure. This allows for more consistent implementation across sectors.”
He noted that the government’s fiscal reform strategy was already yielding early results. The expanded SST, for instance, is projected to generate RM5 billion in revenue for 2024 alone, with collections expected to double to RM10 billion by 2026.
Malaysia’s budgetary overhaul includes several new and modified tax policies aimed at boosting public revenue while targeting high-consumption or high-income groups.
One of these is the Sales Tax on Digital Services (SToDS), which covers foreign digital service providers such as streaming platforms, e-commerce operators, and cloud services. This is projected to contribute RM1.6 billion to government coffers this year.
Another addition is the Low-Value Goods Tax (LVG), which applies to online purchases valued below a certain threshold—previously exempted from taxation. This measure is expected to bring in RM500 million in 2024.
In addition, the government began implementing targeted diesel subsidies earlier this year, replacing blanket fuel subsidies with direct cash transfers to eligible users. According to Anwar, this approach has helped the country save approximately RM600 million each month.
“These reforms are not only about boosting revenue, but also about plugging leakages and redirecting resources to the most vulnerable in society,” he explained.
Another critical reform is the Capital Gains Tax (CGT), which officially came into effect on March 1, 2025. The CGT applies to the disposal of unlisted shares by companies. Although revenue figures from the CGT have not yet been finalised, officials expect it to contribute significantly to national income over time.
Originally, the High-Value Goods Tax (HVGT) was expected to generate around RM700 million annually by taxing luxury products such as watches, jewellery, designer handbags, and high-end electronics. However, the policy was postponed due to concerns over overlapping taxation and the burden on enforcement agencies.
“After careful review, we concluded that the HVGT’s objectives could be better achieved by revising the SST structure,” Anwar said. “This not only reduces administrative burden but also improves compliance and enforcement.”
He added that these reforms form part of the government’s long-term plan to strengthen Malaysia’s fiscal resilience and reduce reliance on petroleum revenue.
Economists and policy analysts have welcomed the integrated approach, noting that it balances the need for increased government revenue with investor and consumer confidence.
“It’s a more pragmatic approach,” said Dr. Sharifah Zubaidah, a fiscal policy expert at Universiti Malaya. “Rather than introducing too many standalone taxes that can confuse businesses and consumers, integrating concepts like HVGT into existing frameworks is more efficient.”
Anwar assured Parliament that the government would continue to monitor the impact of these policies and make adjustments as needed.
“We are committed to building a fairer, more inclusive economy,” he said. “That means ensuring that those who can afford to contribute more do so, while also protecting those who are most in need.”
The Prime Minister reaffirmed that the government’s ultimate goal is to create a taxation system that is transparent, equitable, and responsive to changing economic realities.
