KUALA LUMPUR - The luxury tax proposed under the retabled Budget 2023 is being scrutinised with the best interest of the rakyat being stressed.
Under-Secretary, Tax Division of Finance Ministry Datuk Che Nazli Jaapar said the government is still studying the best practices in other countries and how they can be implemented in Malaysia.
"What are the items, the category of things, the threshold, and how the government plans to impose the tax, will there be new legislation for specific luxury tax or would the government consider tax on existing taxes, for example, an excise of sales tax?
"Further engagement with the industry, retailers, manufacturers, and even the tourism sector should be conducted because we do not want the industry to suffer when we implement the tax,” she said during the Budget 2023 seminar here today.
Che Nazli said the government is committed to fulfilling the needs of the rakyat and ensuring the general public is not burdened with any new taxes.
Following the luxury tax proposal announcement, tax experts viewed that the government needs to define the country’s own meaning of "luxury”.
Chartered Tax Institute of Malaysia deputy president Soh Lian Seng said each country focuses on different items to be taxed, for example, China, which taxes luxury tax on items such as cosmetics, bags, and liquors, Taiwan (passenger cars, private jets, helicopters), Indonesia (luxury residences, aircraft, motor vehicles, and South Korea like jewellery and cameras.
"Therefore, what could be defined as luxury goods in Malaysia? From the tax practitioners’ point of view, I can share two scenarios, one is the challenge of whether the imported goods will be subjected to import duty or sales tax.
"If yes, then it would depend on harmonised systems code (HS code). Increasing existing codes or existing rates for certain classes of goods, may not be so straightforward. So, the question here is will the requirement impact the current custom procedures?” he said.
Soh said that in the second scenario, would the government consider luxury tax to be imposed in the form of sales tax at the retailer level?
From April 1, 2023, all registered sellers will be charged a flat rate of 10 per cent sales tax on the low-value goods (LVG) imported into Malaysia. All taxable goods manufactured locally or goods imported into Malaysia from abroad are subject to sales tax.
"Retailers are required to register for sales tax on LVG,” he said, adding that the government had indicated that luxury tax would be charged on items of a certain value, for example, luxury watches and fashion items.
Soh said the industry is also looking forward to clearer indications about the proposed capital gains tax from 2024.
Currently, Malaysia’s capital gains tax is chargeable to real property gains tax (RPGT) on gains arising from the disposal of real property (any land situated in Malaysia and any interest, option or other rights in or over such land), including shares in a real property company.
Che Nazli, however, said that no double taxation should be imposed on the disposal of unlisted shares by companies.
"To address companies dumping of unlisted shares before the enforcement period, perhaps, we should allow for any disposal or report of disposal of unlisted shares or acquisition of unlisted shares prior to 2023 to be considered as RPGT,” she said. - BERNAMA
Under-Secretary, Tax Division of Finance Ministry Datuk Che Nazli Jaapar said the government is still studying the best practices in other countries and how they can be implemented in Malaysia.
"What are the items, the category of things, the threshold, and how the government plans to impose the tax, will there be new legislation for specific luxury tax or would the government consider tax on existing taxes, for example, an excise of sales tax?
"Further engagement with the industry, retailers, manufacturers, and even the tourism sector should be conducted because we do not want the industry to suffer when we implement the tax,” she said during the Budget 2023 seminar here today.
Che Nazli said the government is committed to fulfilling the needs of the rakyat and ensuring the general public is not burdened with any new taxes.
Following the luxury tax proposal announcement, tax experts viewed that the government needs to define the country’s own meaning of "luxury”.
Chartered Tax Institute of Malaysia deputy president Soh Lian Seng said each country focuses on different items to be taxed, for example, China, which taxes luxury tax on items such as cosmetics, bags, and liquors, Taiwan (passenger cars, private jets, helicopters), Indonesia (luxury residences, aircraft, motor vehicles, and South Korea like jewellery and cameras.
"Therefore, what could be defined as luxury goods in Malaysia? From the tax practitioners’ point of view, I can share two scenarios, one is the challenge of whether the imported goods will be subjected to import duty or sales tax.
"If yes, then it would depend on harmonised systems code (HS code). Increasing existing codes or existing rates for certain classes of goods, may not be so straightforward. So, the question here is will the requirement impact the current custom procedures?” he said.
Soh said that in the second scenario, would the government consider luxury tax to be imposed in the form of sales tax at the retailer level?
From April 1, 2023, all registered sellers will be charged a flat rate of 10 per cent sales tax on the low-value goods (LVG) imported into Malaysia. All taxable goods manufactured locally or goods imported into Malaysia from abroad are subject to sales tax.
"Retailers are required to register for sales tax on LVG,” he said, adding that the government had indicated that luxury tax would be charged on items of a certain value, for example, luxury watches and fashion items.
Soh said the industry is also looking forward to clearer indications about the proposed capital gains tax from 2024.
Currently, Malaysia’s capital gains tax is chargeable to real property gains tax (RPGT) on gains arising from the disposal of real property (any land situated in Malaysia and any interest, option or other rights in or over such land), including shares in a real property company.
Che Nazli, however, said that no double taxation should be imposed on the disposal of unlisted shares by companies.
"To address companies dumping of unlisted shares before the enforcement period, perhaps, we should allow for any disposal or report of disposal of unlisted shares or acquisition of unlisted shares prior to 2023 to be considered as RPGT,” she said. - BERNAMA