The government is moving to prevent high-net-worth individuals from abusing Langkawi and Labuan’s tax-free status to purchase luxury cars at lower prices.
Prime minister Anwar Ibrahim announced during the tabling of Budget 2026 that there will be a ceiling price of RM300,000 for tax exemptions for vehicles purchased in the duty-free islands starting January 1, 2026.
Purchasing high-value luxury, sports and supercars in Langkawi to evade import and excise duties – which would otherwise push prices to millions of ringgit – has hitherto been a widely-accepted practice, so much so that carmakers such as Ferrari and Porsche previously quoted duty-free prices for their cars.
While cars registered on these islands are meant to stay there, they are allowed to leave the duty-free areas for up to 90 days per year. This has opened the exemptions up for abuse, with the Malaysian Anti-Corruption Commission (MCCC) having busted a tax evasion syndicate last year. Anwar said the duty exemptions were meant to be enjoyed by those living in Langkawi, not rich Peninsular Malaysians.
We should point out that the RM300,000 cap applies to the value of the car, meaning that this is likely before taxes are applied. Still, this would eliminate nearly every new sports car in Malaysia – the Lotus Emira V6, for example, carried a tax-free price of RM456,900 when it was launched in 2022. Even the Toyota GR Supra Track Edition costs RM441,000 tax-free.
The closest sports car we could find to slide under the RM300k cap is the BMW Z4 sDrive20i, priced at RM298,800 before duties (RM501,800 in Peninsular Malaysia). This means cars like the base model Porsche 718 Boxster (RM545,000 in Peninsular Malaysia) and Cayman (RM585,000) will not be eligible.
Duty exemptions are still applicable for hot hatches such as the Honda Civic Type R and Toyota GR Corolla, which carry tax-free prices of RM219,900 and RM226,000 respectively. However, the 90-day limit would defeat the purpose of these cars, which are meant to be daily driven.
The post Budget 2026: Langkawi, Labuan tax-free cars limited to RM300,000 in value starting January 1, 2026 appeared first on Paul Tan's Automotive News.
