MY's luxury goods tax will not affect its tourists, according to its deputy finance minister

Malaysia's luxury goods tax will not affect its tourism sector, according to Malaysia’s deputy finance minister, Steven Sim Chee Keong who was speaking in parliament yesterday.

According to media reports, Sim said that tourists do not come to Malaysia with the specific goal to shop for luxury goods, but rather, that they travel to the country to visit its tourist destinations and national heritage sites as well as to buy its local handicrafts.

This comes shortly after retail companies protested the government’s decision to tax luxury goods, citing that it will dissuade tourists from visiting the country.

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PM Anwar Ibrahim revealed during the retabling of the Budget 2023 that the government will increase taxes on individuals who fall within the upper income bracket.  “Some of the items included are luxury branded watches and branded fashion goods,” he said at the time. 

Malaysian retail associations then put out a joint statement urging the government to re-think and withdraw the proposal, especially since neighboring states were developing their respective tourism industries as major contributors to their economy.

Sim went on to add that the luxury tax was created to extend the country's tax revenue collection and to create a more progressive taxation system.

"We are engaging with all stakeholders including the retail and tourism sectors to see how the impact can be reduced," said Sim in a video that was seen by A+M. Sim was speaking to reporters after the parliament session in this clip.

Sim also said that the tax only applies to goods classified as luxury goods and that it does not involve essential goods such as food and mobile phones.

According to a statement to the press by the Malaysian Association of Tours and Travel Agents (MATTA) in February, it was stated that the MATTA hoped for a more tourism-friendly budget with better incentives and funding so that it could help industry stakeholders.

MATTA also offered a budget proposal with attractive tax reliefs to be provided to encourage individuals to travel domestically.

“The budget may need improvements with special emphasis and incentives on tourism products and infrastructure to ensure that the Malaysian tourism industry retains its cutting edge in the long term,” added Datuk Tan Kok Liang, MATTA's president in the statement. 

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