KUALA LUMPUR: The duty-free status of Langkawi is not intended to allow wealthy individuals to keep luxury vehicles on the island for several years before bringing them into the Principal Customs Area to avoid paying higher taxes.
Deputy Finance Minister Liew Chin Tong said changes to the duty and tax exemption policy for vehicles were introduced not only to address revenue leakage but also to discourage such business practices.
"At its core, this is a business model that we do not wish to promote, and we hope this policy will be accepted by all citizens," he said in reply to a supplementary question from Datuk Mohd Suhaimi Abdullah (PN-Langkawi) during the Special Chamber session in the Dewan Rakyat today.
Mohd Suhaimi had sought clarification on the government's review of the RM300,000 threshold for vehicle tax exemptions in Langkawi and called for stricter enforcement to prevent abuse of the facilities.
Liew acknowledged that some business operators would be affected by the policy but stressed that local residents would not be impacted.
Earlier, he said that, effective Jan 1, 2026, duty and tax exemptions for vehicles would be capped at a value of RM300,000 to prevent wealthy individuals from abusing the incentives to acquire luxury vehicles.
He said the threshold was reasonable and sufficient to meet the needs of local residents, car rental operators, taxi services and commercial vehicle users, while ensuring that the exemptions remained focused on vehicles used for daily activities and local business operations.
"Although there have been changes to the tax exemption policy for certain products on Langkawi Island, its status as a Duty-Free Island remains in effect," he added.
Meanwhile, Liew said the government had announced in Budget 2027 an increase in the eligibility threshold for duty-free purchases by visitors and tourists from RM1,000 to RM10,000.
He said the revised threshold covered several additional categories of goods, including fashion accessories such as watches and handbags, electrical and electronic items, and textiles, while excluding tobacco products and motor vehicles.
"Raising the value limit allows both domestic and international tourists to spend more, which in turn generates a direct economic spillover for duty-free shop owners and local entrepreneurs in Langkawi.
"At the same time, the requirement for a minimum 48-hour stay will boost the hospitality sector, homestays, transport services, and the food and beverage industry, ensuring that economic benefits are widely enjoyed across the island's entire tourism ecosystem," he said.
Liew added that the government was also updating and expanding the list of Langkawi-made goods eligible for import duty exemptions when brought into the Principal Customs Area, increasing the number of items from 23 to 29.
He said the measure would particularly benefit micro, small and medium enterprises (MSMEs) in Langkawi.
Both measures will take effect on Jan 1, 2027, he added.
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