Tax experts estimate that the government could receive an additional income injection of up to RM1.5 billion if the Luxury Goods Tax is imposed on car purchases priced at RM200,000 and above. Dr. Mohd Fairuz A Razak, the Secretary-General of the Malaysian Institute of Accountants (MATA), revealed this estimation based on a study by the Fiscal Studies Institute (IFS) if such a luxury tax were applied to cars.
Luxury tax affecting cars, jewelry and watches
While no official government estimate has been released, a study by the Malaysian Institute of Economic Research (MIER) suggests the potential for an additional annual revenue of between RM500 million and RM1 billion.
However, it seems that the current luxury tax is only for watches worth RM20,000 and above, cars that are RM200,000 and above, and finally, jewelry worth RM10,000 and above. It is unclear if handbags, shoes and belts are going to be charged with the luxury tax.