Core HVGT Principles Retained In Updated Tax Framework

KUALA LUMPUR, Nov 24 (Bernama) -- Although the High-Value Goods Tax (HVGT) was not implemented, its core principles have been reviewed and incorporated into improvements to existing tax laws through the revised sales tax rates and the expansion of the service tax (SST) scope.

Deputy Finance Minister Lim Hui Ying said that under this approach, luxury and discretionary items are now subject to sales tax at five or 10 per cent, in line with HVGT’s original objective of ensuring that high-income groups contribute fairly to national revenue.

“The current sales tax rates are considered sufficient for now to be imposed on those who can afford to purchase or use these non-essential goods,” she said in response to a question from Wan Hassan Mohd Ramli (Dungun-PN).

Wan Hassan had asked whether the government planned to introduce a more comprehensive mechanism to effectively tax the wealthy and owners of luxury goods following the cancellation of HVGT.

At the same time, Lim reiterated the government’s commitment to strengthening the country’s fiscal position while ensuring that the people’s welfare continues to be protected.

She said the government’s decision to scrap the HGTV and revise the SST is a more holistic approach as it takes into account the impact on industry and consumers, and ensures smoother and more effective implementation under the existing tax system.

She also emphasised that the government will continue to assess the effectiveness of these measures from time to time to ensure the tax structure remains progressive, sustainable and aligned with the country’s fiscal needs.

Meanwhile, Lim said the government will periodically review the implementation of the Low-Value Goods (LVG) tax on imported products priced at RM500 and below which are sold online, to ensure that all taxes are applied fairly.

She said this in response to a supplementary question on why the LVG tax is collected from the public while the HVGT is not collected and has been discontinued.

-- BERNAMA