SHAH ALAM – The government will limit vehicle tax exemptions in Langkawi and Labuan to vehicles valued at RM300,000 and below, effective Jan 1, 2026.
Prime Minister Datuk Seri Anwar Ibrahim said the measure was introduced to curb leakages and misuse of tax privileges by luxury vehicle owners who have long taken advantage of the exemption system.
“The government has found that some luxury car owners have been exploiting tax exemptions in Langkawi and Labuan for quite some time.
“To ensure the benefit reaches the intended groups, the government will limit the value of vehicles eligible for exemption to not more than RM300,000,” Anwar said when tabling the 2026 Budget in the Dewan Rakyat, today.
The Prime Minister emphasised that the move aligned with the government’s efforts to strengthen a fair and transparent taxation system, without affecting tourism and investment incentives in both duty-free islands.
Anwar who is also Finance Minister said this initiative was part of ongoing fiscal reforms to tighten governance, prevent abuse and ensure equitable distribution of tax benefits.
He also noted that the new limit seeks to strike a balance between maintaining Langkawi and Labuan’s status as attractive duty-free zones while preventing high-value vehicle owners from taking undue advantage of the policy.