The federal government is transferring to forestall high-net-worth people from abusing Langkawi and Labuan’s tax-free standing to buy luxurious automobiles at decrease costs.
Prime minister Anwar Ibrahim introduced in the course of the tabling of Funds 2026 that there will likely be a ceiling worth of RM300,000 for tax exemptions for automobiles bought within the duty-free islands beginning January 1, 2026.
Buying high-value luxurious, sports activities and supercars in Langkawi to evade import and excise duties – which might in any other case push costs to tens of millions of ringgit – has hitherto been a widely-accepted apply, a lot in order that carmakers equivalent to Ferrari and Porsche beforehand quoted duty-free costs for his or her automobiles.
Whereas automobiles registered on these islands are supposed to keep there, they’re allowed to depart the duty-free areas for as much as 90 days per 12 months. This has opened the exemptions up for abuse, with the Malaysian Anti-Corruption Fee (MCCC) having busted a tax evasion syndicate final 12 months. Anwar stated the responsibility exemptions had been meant to be loved by these residing in Langkawi, not wealthy Peninsular Malaysians.
We should always level out that the RM300,000 cap applies to the worth of the automotive, that means that that is possible earlier than taxes are utilized. Nonetheless, this may remove practically each new sports activities automotive in Malaysia – the Lotus Emira V6for instance, carried a tax-free worth of RM456,900 when it was launched in 2022. Even the Toyota GR Supra Monitor Version prices RM441,000 tax-free.
The closest sports activities automotive we might discover to slip below the RM300k cap is the BMW Z4 sDrive20i, priced at RM298,800 earlier than duties (RM501,800 in Peninsular Malaysia). This implies automobiles like the bottom mannequin Porsche 718 Boxster (RM545,000 in Peninsular Malaysia) and Cayman (RM585,000) is not going to be eligible.
Responsibility exemptions are nonetheless relevant for decent hatches such because the Honda Civic Kind R and Toyota GR Corollawhich carry tax-free costs of RM219,900 and RM226,000 respectively. Nevertheless, the 90-day restrict would defeat the aim of those automobiles, which are supposed to be day by day pushed.
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