Labuan:The Labuan Chamber of Commerce is advocating for targeted tax relief and clearer policies to help local businesses overcome challenges following the Budget 2027 announcement. The chamber specifically highlighted the needs of local producers and small and medium enterprises (SMEs).

According to BERNAMA News Agency, Daniel Doughty, president of the chamber, expressed approval of the proposed RM10,000 duty-free shopping allowance for Labuan and Langkawi. However, he emphasized that this should be supplemented by measures that cater specifically to the economic needs of each island. Doughty pointed out the differences between the visitor markets, transport connections, and business conditions of Labuan and Langkawi, suggesting that a uniform shopping allowance should be supported by targeted measures.

Doughty noted the positive aspect of expanded duty relief for qualifying Langkawi products under Appendix 31 and urged the government to implement similar incentives for Labuan-produced goods. He highlighted the importance of market access to Sabah, Sarawak, and Peninsular Malaysia for Labuan businesses due to the island's limited domestic market.

The RM10,000 duty-free allowance, effective January 1, 2027, applies to eligible new goods taken from Labuan and Langkawi, with a condition of a minimum 48-hour stay. However, this allowance excludes items like alcoholic beverages, tyres, cigarettes, tobacco products, and electronic cigarettes, including vape liquids. Doughty encouraged reconsideration of these exclusions, particularly with regard to beer, wine, and spirits, and the minimum stay requirement to better match Labuan's visitor market.

Doughty also expressed dissatisfaction with the Budget 2027's omission of issues concerning service-tax and local-product duties previously raised by Labuan SMEs. He stressed the need for clarity on which proposals have been accepted, remain under consideration, and the timeline for decisions.

He called on the Finance Ministry and the Customs Department to clarify the service-tax treatment for work entirely conducted in Labuan, including subcontracting services provided to customers registered elsewhere. He also advocated for duty relief for locally produced goods, with safeguards to prevent the repackaging of imported products for exemption eligibility.

Doughty emphasized the need for a tax framework that supports genuine local production, provides business certainty, and enables Labuan enterprises to compete in Malaysia's domestic market. He urged the authorities to provide written responses and a clear implementation timeline for pending SME tax proposals, and reiterated the chamber's readiness to cooperate in developing measures to strengthen Labuan's economy.