HVGT, DGT off the books, here’s why

The government has cancelled its plan to implement high value goods tax (HVGT), said Finance Minister Datuk Seri Anwar Ibrahim.

The reason being, the principle of taxing luxury items have been incorporated into the revised sales tax structure with luxury and selected goods now subject to either 5% or 10% in tax.

Anwar revealed this in his written reply to Shamsulkahar Deli (BN-Jempol) who queried on the projected increase in national revenue due to fiscal reform measures.

The reforms include the introduction of the HVGT, digital goods tax (DGT), capital gains tax (CGT), and low-value goods tax (LVG), as well as the expansion of the sales and service tax (SST) and the targeting of subsidies.

HVGT was initially put in the backburner as the government prioritised other newly implemented fiscal reforms.

HVGT was supposed to be implemented on May 1, 2024 to generate RM700 million annually but details have been scant.

Anwar added that the government also did not implement DGT for the same reason.

“This tax applies to service providers offering or supplying services online or through other electronic networks. In 2024, service tax on digital services generated RM1.6 billion in revenue,” he said.

As for the LGT, which took effect on Jan 1, 2024, Anwar said it contributed approximately RM500 million in revenue for the year.

He said the targeted diesel subsidies had saved the government up to RM600 million per month so far, and reiterated that the expanded SST is expected to generate an additional RM5 billion in revenue this year, doubling to RM10 billion by 2026.