The Royal Malaysian Customs Department (RMCD) has confirmed that the Malaysian government will begin implementing a 10% sales tax on imported low-value goods (LVG) that are purchased online, set to take effect from 1 April 2023 onwards.

With this, Malaysians will soon need to pay an extra 10% in tax for imported goods that are priced less than RM500, purchased online and delivered from overseas to customers in Malaysia by air, sea, or land transport (including duty-free areas and free zones). Such goods – excluding specific items, such as cigarettes, tobacco, and liquor – are currently exempted from sales tax when they are brought in using air courier services through selected international airports.

Along with this confirmation, the RMCD also clarified that this new tax will not be imposed on the delivery charges or insurance costs for transporting the items into Malaysia; it will only apply to the base price or value of the goods. Additionally, alcohol, tobacco products (including smoking pipes and pipe bowls), and cigarettes (including electronic cigarettes, vapes, and non-nicotine liquid or gel preparations) are not subjected to the 10% tax.

So to illustrate, if you’re buying an imported item at the price of RM300 from an e-commerce site (with a delivery charge of RM10) after April 2023, your total will then come up to RM340 (RM300 + RM30 + RM10). This is in comparison to the amount of RM310 charged if you made your purchase before April 2023.

Do note as well that this sales tax will be charged during order confirmation by the online shopping platform. This means that if you made your imported LVG order before 1 April 2023, but the goods are scheduled to arrive only after 1 April, you will not be charged the 10% LVG sales tax.

Meanwhile, merchants who will be affected by the implementation of this new LVG tax can already begin applying to be a registered seller with the RMCD because the legislations related to the tax have already come into force since 1 January 2023. All sellers (whether in Malaysia or a foreigner) who meet the following criteria will be required to apply:

• Sell LVG that are brought into Malaysia via land, sea or air transport
• Have an LVG annual sales value that exceeds RM500,000 in Malaysia

The 10% LGV sales tax was first proposed during the tabling of Budget 2022 to level the playing field for domestic and imported goods, as local manufacturers are already being charged a 5% or 10% tax. It was eventually passed with a majority voice vote by Dewan Rakyat in August 2022. It was also initially proposed for the tax to take effect starting from 1 January 2023, but was subsequently postponed to April 2023.

If you have any queries regarding the implementation of the new LVG tax, you can reach out to the RMCD via email ([email protected]).

(Sources: Royal Malaysian Customs Department, Malay Mail)

• TAGS:
• Low-Value Goods (LVG)
• LVG Tax
• Online Shopping
• Royal Malaysian Customs Department
• Sales Tax
• Sales Tax (Amendment) Bill 2022