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Luxury goods tax won't affect tourism, says deputy minister

Steven Sim says visitors to Malaysia are more interested in tourist destinations and local handicrafts than shopping for luxury goods.

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Tourists make their way through the Masjid India area in the capital city of Kuala Lumpur.
Tourists make their way through the Masjid India area in the capital city of Kuala Lumpur.

The luxury goods tax which is being fine-tuned will not affect the country's tourism sector, Deputy Finance Minister Steven Sim Chee Keong said today.

He said tourists to Malaysia are not interested in shopping for luxury goods but come to visit interesting tourist destinations and national heritage sites, and buy local handicrafts.

"At the same time, they also get tax relief on the purchase of Malaysian handicrafts. If we look at it from that perspective, we are actually encouraging more people to come," he told reporters at the lobby of the Parliament building.

He was commenting on the call by former prime minister Ismail Sabri Yaakob for the government to reconsider the implementation of the luxury goods tax as this would deter tourists who wish to shop in Malaysia.

Sim said the tax was to extend the country's tax revenue collection and create a more progressive taxation system without causing the industry to suffer.

"We are engaging with all stakeholders including the retail and tourism sectors to see how the impact  can be reduced," he said.

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

In the new budget for 2023, Prime Minister Anwar Ibrahim proposed the introduction of a luxury goods tax from this year with a certain value limited to the type of goods, including watches and fashion items, which he said would increase national revenue.