Malaysia's plan to introduce a high-value goods tax (HVGT) on 1 May
has been pushed back, much to the relief of businesses and stakeholders.
The delay, attributed to the need for further discussions, has sparked
debates on the efficacy of the HVGT versus the goods and services tax
(GST).
With foreign visitors' habits of indulging in luxury purchases during
their stay in Malaysia ranging from high-end electronics to fine
jewellery, concerns emerged regarding its potential repercussions on
tourist spending habits and the overall attractiveness of Malaysia as a
destination.
Deputy Finance Minister Lim Hui Ying emphasised the importance of
addressing these concerns, highlighting the implementation of a Tourist
Refund Scheme. This scheme aims to alleviate the tax burden on foreign
tourists, who may be deterred by the increased costs of luxury items.
However, without such provisions in place, there were fears that the
HVGT could deter tourists and exacerbate the challenges faced by local
residents in coping with the higher costs of living. The complexity of
the tax system, coupled with the potential increase in the cost of
luxury items, might discourage both locals and tourists from making
significant purchases in Malaysia.
Retail industry voices, including those from the Federation of
Goldsmiths and Jewellers Association of Malaysia and the Malay Chamber
of Commerce Malaysia, echoed these concerns. They emphasised the need
for a thorough assessment of the HVGT's impact on both locals and
tourists, calling for measures to mitigate any adverse effects on their
purchasing power and overall economic well-being.