Sales Tax Collection For Low Value Goods Postponed
The Royal Malaysian Customs Department has quietly posted a new update regarding the dreaded sales tax for low value goods (LVG). While the government was previously set to start collecting the new tax starting 1 April 2023, it seems that the move has been postponed indefinitely.
As of writing, the Customs department has not publicly announced a new date for when it will start imposing the sales tax, so it seems that online shoppers can breathe a temporary sigh of relief. It has not cited a reason for the sudden deferment.
For those who are unfamiliar with the situation, the LVG sales tax has technically already been in force since 1 January 2023, but the federal administration said it would only start charging it in April. When it starts being imposed, it will abolish the exemption for sales tax on imported LVG with a total value of less than RM500.
The new tax will impose a flat 10% rate on any imported LVG regardless of the value, which means that it is set to make online shopping more expensive for Malaysians. Exemptions to this new levy are limited to cigarettes, tobacco products, smoking pipes, electronic cigarettes, vapes, non-nicotine liquids for vaping, and intoxicating liquor.
All foreign and domestic sellers who import such products into Malaysia with a total sale value of over RM500,000 within 12 months will have to register as a Registered Seller (RS) in order to start collecting the sales tax. If a seller fails to pay the sales tax, they will be subject to a penalty between 10% to 40%, depending on how late their payment is.
Delivery charges or insurance won’t be taken into account when calculating how much the sales tax would be imposed on any imported item. That being said, the government has already announced a planned service tax on delivery services, although it has luckily been put on hold for the time being.
Thanks for the tip, premier239!
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