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Budget 2026: Tax-Free Cars from Langkawi & Labuan Will Be Limited to RM300K

Mukhlis Azman

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Tax-free cars from Langkawi and Labuan will only be limited to RM300,000 in value from Jan 1, 2026, onwards.

The days of ultra-high net-worth individuals abusing Langkawi and Labuan’s tax-free status to purchase luxury cars at lower prices might be over soon. That is because the government will set a ceiling price of RM300,000 for tax exemptions for vehicles in said duty-free islands from Jan 1, 2026, onwards.

PMX-Budget2026.jpg

Announced by Prime Minister Datuk Seri Anwar Ibrahim during today’s Budget 2026 tabling, this RM300,000 cap will be applied to the actual value of the car itself before any taxes or duties are applied.

Even when applied to their pre-taxed prices, this new price cap would potentially eliminate almost every new performance and exotic car in Malaysia, given that most of them are priced way above the RM300,000 cap even before the tax comes into effect.

Porsche_911_GT3_Ice_Grey-27.jpgCaricarz-MBA-2025MY-BMW-M2-2.jpg

Ultimately, this move is part of the government’s plan to curb several tax evasion syndicates that have been looming for years in Malaysia, as purchasing high-valued cars in Langkawi or Labuan to evade import and excise duties has been a widely accepted practice among the ultra-high net-worth individuals.

While cars registered in these tax-free heavens are meant to stay there, the government allowed them to be used in other parts of the country for up to 90 days in a year, which has opened up an entire loophole for abuse and syndication.

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That said, while this decision is made for the greater benefit of preventing tax evaders, it could also result in the declining sales of premium and luxury cars in Malaysia but also a potential boost to the local grey import car market—both of which we’d reckon will not bode well with premium automakers here in Malaysia.


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Written By

Mukhlis Azman

An avid two-wheeler that writes and talks about four-wheelers for a living, while dreaming of an urban transit-laden Malaysia. @mukhlisazman

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JPJ Running Numbers

KUALA LUMPUR

VRA1655

SELANGOR

BSQ3512

JOHOR

JYX2763

PULAU PINANG

PSC4903

PERAK

APH6581

PAHANG

CFG5949

KEDAH

KGG2081

NEGERI SEMBILAN

NEK4832

KOTA KINABALU

SJR9999*

KUCHING

QAB8364N

Last updated 26 May, 2026

Fuel Price

Petrol

RON 95

RM 3.97

+1.38

RON 97

RM 4.90

+1.75

RON 100

RM 7.20

+2.20

VPR

RM 8.23

+2.00

Diesel

EURO 5 B10

RM 5.12

+2.08

EURO 5 B7

RM 5.32

+2.08

Last updated 30 Apr, 2026

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