Tourist arrivals in Langkawi post-COVID-19 have risen by 323,115 people, or 11%, from 2022 to 2024, as reported by the Ministry of Finance (MOF). This surge has contributed to a 34.9% increase in tourism revenue, amounting to RM2.4 billion.

However, the ministry noted a rise in revenue losses due to the island’s tax exemption status. The government saw a loss of RM227.96 million, or 59.7%, in excise duties, particularly from items such as passenger vehicles.

“The loss of revenue due to the Langkawi Duty-Free Island’s tax exemptions is increasing, and any additional proposals for exemption items would have a direct impact on national revenue,” the MOF added in a written response posted on the Parliament website.

The MOF’s statement came in response to a query from Padang Serai MP Datuk Azman Nasrudin regarding the annual tax revenue losses incurred by the government due to Langkawi’s duty-free status.

Meanwhile, the MOF reported on the revenue generated by new taxes introduced in 2024. The Low Value Goods Tax (LVG) brought in RM476.1 million, while the Digital Service Tax (DST) contributed RM1.6 billion. The anticipated Capital Gains Tax (CGT), set for implementation on March 1, 2024, will begin to show its impact after corporate taxpayers submit their Income Tax Return Form (BNCP) in 2025.

Additionally, the MOF clarified that the government has no plans to reinstate the Goods and Services Tax (GST). The existing Sales and Service Tax (SST), which has been in place for over 40 years, remains effective and can be improved to generate more revenue more swiftly. The introduction of GST would require a longer preparation period, which the MOF believes would be less efficient than enhancing the SST system. This was in response to a question from Bera MP Datuk Seri Ismail Sabri Yaakob regarding the government’s plans for new tax implementations.