Dewan Rakyat Passes Bill To Impose 10% Tax On Imported Low-Value Goods Purchased Online
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(Image: Malay Mail/Miera Zulyana)

Dewan Rakyat has passed the Sales Tax (Amendment) Bill 2022 with a majority voice vote. With this, the government will begin imposing a flat rate of 10% tax on imported low-value goods (LVG) that are purchased online, starting from 2023.

Imported LVG are defined as imported goods with a total value of less than RM500 per consignment. These are currently exempted from sales tax when they are brought in using air courier service through selected international airports (except for selected products, such as tobacco and cigarettes).

With the passing of the amendment bill, this exemption will be removed, and the 10% tax will be calculated based on the base price of the LVG – not inclusive any other taxes, fees, or other charges imposed. Additionally, the bill will apply to both resident and foreign sellers who offer such products on online marketplace; these traders are required to display their particulars on the packages of their LVG.

The bill also clarified that the Finance Ministry will have the right to determine what are considered as LVG based on three criteria: the class of goods, price, and the channel used to bring the goods into the country.

The bill – which was first announced during the tabling of Budget 2022 – was tabled for its first reading by Deputy Finance Minister II Yamani Hafez Musa on Monday this week, followed by a subsequent second and third reading. He also stressed that the proposal of this tax is not a step backwards, and that Malaysia is not the only country to implement it.

“At the global level, countries such as Australia, New Zealand, the UK, and Norway have already taxed either goods and services tax (GST) or value added tax (VAT) on low value goods. Singapore has also implemented the same thing from 1 January 2023, where goods worth SG$400 are subject to GST at a rate of 7%” said Yamani Hafez Musa, adding that the additional tax collected will be used for the development of the country and to benefit the people.

Finally, the tax on LVG is also expected to level the playing field for domestic and imported goods, as local manufacturers are already being charged a 5% or 10% tax at present.

(Sources: Free Malaysia Today, The Edge Markets)

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