Association proposes more ‘reasonable’ threshold of RM50,000 for gold jewellery

KUALA LUMPUR: The Malaysia Gold Association (MGA) hopes the government will reconsider the threshold for gold jewellery under the high value goods tax (HVGT) and proposes a more “reasonable” threshold of RM50,000 with a tax rate of five per cent.

MGA president Datuk Louis Ng stressed the potential negative impact on the sector if the threshold was not appropriately adjusted.

“In Malaysia, there are numerous factories and retail outlets specialising in jewellery. If the threshold is not set correctly, it could severely affect the industry, possibly leading to layoffs. Businesses will suffer as there will be fewer customers. The present threshold is too restrictive for the industry.”

The HVGT ranging from five to 10 per cent was announced by Prime Minister Datuk Seri Anwar Ibrahim at the tabling of the 2024 Budget on Oct 13 last year to broaden the tax base and reduce national deficit.

The government anticipates an annual revenue of RM700 million from the HVGT.

Luxury items subject to HVGT include high-end watches valued more than RM20,000, designer accessories, luxury vehicles exceeding RM200,000, yachts, jets, real estate above certain price thresholds and jewellery valued at more than RM10,000.

The HVGT, previously known as the luxury goods tax, was supposed to be implemented on May 1.

There is speculation that the government could impose a 10 per cent HVGT on gold with a threshold of RM10,000.

KGV International Property Consultants executive director Samuel Tan said while some consumers might scale back due to the tax, passionate collectors and the super-rich were likely to remain largely unaffected.

He said buying gold served various purposes, including hedging against inflation during economic uncertainty.

“People will tend to continue buying gold as it provides a sense of release and indulgence.”

Tan believes that unless the prices become exorbitant, purchasing behaviour won’t significantly change.

Additionally, Tan said Malaysia did not have the cheapest luxury goods. Consequently, he anticipated that consumers might spend their money in other parts of Asia or Europe.