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For years, Malaysia’s duty-free islands of Langkawi and Labuan have been more than just tropical getaways—they’ve been the ultimate tax haven for anyone with deep pockets and a taste for luxury wheels.
But that sweet ride is about to hit a speed bump.
Prime Minister Datuk Seri Anwar Ibrahim just dropped the hammer this afternoon (10 October), announcing that come 1 January 2026, the tax-free car party is getting a serious reality check.
No more six-figure Ferraris and Lamborghinis skating past the taxman.
Game Over for the Rich
The new rule? If your ride costs more than RM300,000, you’re paying full freight like everyone else.
Speaking to Parliament during his Budget 2026 presentation, Anwar didn’t mince words about what’s been going down on these islands.
The wealthy have been gaming the system, he said, using the duty-free status as their personal luxury car warehouse while ordinary Malaysians foot the tax bill elsewhere.
“This step will prevent tax leakage and ensure the tax exemption is used only to help local residents in Langkawi and Labuan buy vehicles for their daily use,” Anwar declared, effectively pulling the plug on what had become Malaysia’s version of a high-end automotive free-for-all.
The Writing Was On The Wall
What started as a policy to help island residents get affordable transportation had morphed into something else entirely—a backdoor for the ultra-rich to dodge taxes on their dream machines.
Park a Porsche in Langkawi, save a fortune in duties. It was that simple.
But simple doesn’t mean fair, and the government finally called time on the scheme that let Malaysia’s elite play by different rules.
The RM300,000 cap isn’t arbitrary—it’s designed to cover practical family cars and work vehicles while shutting down the luxury loophole that turned duty-free islands into exclusive automotive playgrounds.
For the wealthy collectors who’ve been stockpiling supercars on these islands, 1 January 2026, marks the end of an era.
READ MORE: Belanjawan Rakyat: What Will The Rakyat Get?
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