KUCHING, 18 Dec: The introduction of the 10 percent sales tax on imported low-value goods (LVG) sold online effective 1 January 2024 aims to level the playing field for businesses in Malaysia, especially the Micro, Small and Medium Enterprises (MSMEs).
In a statement today, the Ministry of Finance (MOF) said the implementation of the sales tax will address the tax treatment disparity between goods sold by retail businesses and online businesses.
“Globally, there is a common practice not to impose sales tax and import duty on imports below a De Minimis (minimal) value, which was set at RM500 for Malaysia, to facilitate ease of customs
clearance for postal and courier shipments.
“With the proliferation in online retail, this created an unfair advantage for online businesses selling directly to Malaysian consumers compared to retail businesses in Malaysia,” the statement read.
MOF said the sales tax legislation on imported LVG was initially intended to be enforced on 1 April 2023 but was postponed to allow the government to engage with industry players and key stakeholders on implementation issues.
It added, other neighbouring countries have already implemented taxes on LVG such as Singapore beginning 1 January 2023 and Indonesia effective 1 April 2023.
The implementation of the sales tax on LVG would see goods valued at RM500 or less imported into Malaysia by land, sea, or air be charged with a sales tax of 10 percent.
The goods do not include cigarettes, tobacco products, intoxicating liquors, and smoking pipes — all of which are already subjected to an import duty, excise duty and sales tax.
Online local and foreign sellers with total sales value of LVG brought into Malaysia exceeding RM500,000 in 12 months may apply to be registered under the Sales Tax Act (Amendments) 2022 at mylvg.customs.gov.my. – TVS
