Malaysia does not give sales tax exemptions for goods bought from overseas online platforms. Finance Minister II Datuk Seri Amir Hamzah Azizan confirmed this during the Dewan Rakyat’s ministerial question time, explaining that the tax rules apply the same way to both imported and local goods.

Sales Tax Applies To Imported Low-Value Goods

Only items listed in the Sales Tax Order 2025 qualify for a sales tax exemption. This list is set by law, and the exemption does not depend on where the item is purchased or how it enters Malaysia.

Malaysia currently charges a 10% sales tax on imported low-value goods. These goods are defined as items worth RM500 or less that are bought online and shipped from overseas. The tax took effect on 1 January 2024 after being gazetted, and was introduced to ensure foreign online sellers follow similar tax rules as Malaysian businesses.

In 2024, the low-value goods tax collected RM476 million. This figure gives the government a clearer view of the growing volume of online cross-border shopping by Malaysians.

Why The Low-Value Goods Tax Exists

Before the 2024 change, imported parcels below RM500 did not incur sales tax. This made many overseas products cheaper compared to similar items sold by local shops, especially small and medium enterprises. The tax was introduced to reduce this pricing gap and support a more consistent tax framework for e-commerce.

Countries such as Singapore, Australia, and the European Union have already implemented similar rules for low-value imports. Malaysia’s approach is aligned with these international practices as online shopping continues to grow across borders.

Parliament Questions On Overseas Online Transactions

Bakri MP Tan Hong Pin asked about the amount of sales tax, service tax, and other related taxes collected from online transactions involving overseas sellers from 2021 to 2025. He also asked whether any items bought through foreign platforms receive special exemptions.

In response, Amir Hamzah clarified that exemptions follow the Sales Tax Order 2025 and are not based on whether the platform is foreign or local. This means an item bought from an overseas website is taxed the same way as one bought locally if it falls under the same tax category.

Service Tax On Foreign Digital Services

Malaysia also collects service tax on digital services provided by foreign platforms. Companies such as Netflix, Apple, Microsoft, and Google are required to register with the Royal Malaysian Customs Department and charge service tax on digital services used in Malaysia.

Revenue from taxing these digital services has increased steadily. Collections grew from slightly above RM802 million in 2021 to RM1.62 billion in 2024. This rise reflects higher usage of streaming, software, cloud services, and mobile apps.

What This Means For Online Shoppers

For Malaysian consumers, this means imported items under RM500 bought online will continue to be taxed at 10%. The amount is usually shown at checkout if the platform is registered to collect the tax.

For digital services, platforms must charge service tax if their services are consumed in Malaysia. This applies even if the company is based overseas, ensuring equal treatment for both local and foreign service providers.

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