10% Sales Tax On Low-Value Online Goods Below RM500 Starting From 1 January 2024
A 10% sales tax is finally being implemented on low-value goods sold online starting next year to level business competition inside and outside Malaysia.
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Malaysia will start charging a 10% sales tax on low-value goods (LVG) costing below RM500 that are sold online from 1 January 2024 onwards, according to the Royal Malaysian Customs Department (RMCD).
The tax applies to goods bought online and delivered to Malaysia by vendors registered with the finance ministry.
The tax for goods sold below RM500 online was supposed to come into effect on 1 April 2023 under Budget 2022, but was postponed indefinitely by the RMCD in March 2023.
RMCD has defined LVG as all goods sold below RM500 and brought into Malaysia by land, sea, or air.
The products exempted from the LVG tax include cigarettes, tobacco products, intoxicating liquors, electronic cigarettes, and preparation of a kind used for smoking.
Vendors who sell LVG online must register with the RMCD if the total sale value of LVG brought into Malaysia exceeds RM500,000 in 12 months.
According to Free Malaysia Today, the government expects to collect RM200 million yearly from the tax.
The then Deputy Finance Minister, Datuk Mohd Shahar Abdullah, said the tax would level the playing field between online sellers inside and outside Malaysia. It’s hoped that the tax would empower local markets and businessmen.
The tax also levels the competition between brick-and-mortar stores and online marketplaces. The former have to pay higher taxes, rent, and overheads as compared to online businesses.
For more information regarding the implementation of the LVG sales tax, head over to RMCD’s website at http://www.customs.gov.my/en/pages/main.aspx
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