KUALA LUMPUR, Dec 18 — The sales tax on imported low-value goods (LVG) sold online, which will take effect on Jan 1, 2024, is aimed at levelling the playing field for local businesses, according to the Ministry of Finance (MoF).
The ministry said there is a common global 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 (physical) retail businesses in Malaysia,” it said in a statement today.
To address the sales tax loophole, the MoF said, the government announced the sales tax legislation on imported LVG in Budget 2022.
Initially intended to be enforced on April 1, 2023, it was postponed to allow the Madani government to engage with industry players and key stakeholders on implementation issues, the ministry said.
“This is to ensure that the implementation of the legislation would meet its objective, which is to address the tax treatment disparity between goods sold by retail businesses and online businesses.
“This would then enable a level playing field for businesses in Malaysia, especially micro, small and medium enterprises (MSMEs),” it explained.
With the implementation of the sales tax on LVG, goods valued at RM500 or less which are imported into Malaysia by land, sea, or air will be charged with a sales tax of 10 per cent.
These 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.
The MoF said 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.
The ministry said taxes on LVG have already been applied in Singapore effective Jan 1, 2023, and in Indonesia effective April 1, 2023.
