[ UPDATE 18/12/2023 09:00 ] Malaysia to impose 10% Low Value Goods Tax for online shopping items shipped from overseas starting 1 January 2024.
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Starting from this April, the Malaysian government will start collecting a new sales tax, which will see Malaysian shoppers having to pay 10 per cent more every time they buy goods imported from overseas (that are priced less than RM500).
How does this new tax work? Does it only apply to Malaysian shoppers? What if you are a Malaysian seller of imported goods online that have a value of less than RM500?
Here’s everything you need to know, based partly on the Royal Malaysian Customs Department’s (RMCD) draft tax guide as of January 1.
What is this 10% sales tax on low value goods (LVG)?
The Malaysian government will be imposing a sales tax of 10 per cent on “low-value goods” (LVG) (goods that are priced less than RM500) which are sold online and delivered from overseas to customers in Malaysia (including in duty-free islands Labuan, Langkawi, Tioman and Pangkor and special areas like free zones) by air, sea or land.
You have to pay this new tax from April 1, 2023 onwards.
How much more do you need to pay when buying an item from overseas?
The new sales tax of 10 per cent is only for overseas low-valued goods (priced less than RM500) bought online from April 1, 2023, onwards.
This tax will not be imposed on the delivery charges or insurance costs for the bringing in of the item from overseas to Malaysia.
Here’s an example: Let’s say you are buying an item from overseas with the price of RM490 from an online shopping platform, and there is a delivery charge of RM10. The total will be RM500, if you bought it before April.
From April onwards, the new sales tax will mean you have to pay RM490, plus RM49 (10 per cent sales tax on the item), and the RM10 delivery fee. The total payable upon purchase will now be RM549.
The sales tax on the LVG will be charged at the time when the online shopping platform issues the order confirmation.
What if the goods only arrive after April 1, do you need to pay the tax?
As long as you bought the LVG online before April 1, 2023, you do not have to pay the 10 per cent LVG sales tax, even if the goods are delivered to you after April 1.
Example one: If the seller issues the invoice on March 31, 2023 (with payment received), and you receive the goods on April 1 or after April 1, no LVG sales tax is imposed.
Example two: The seller’s invoice date (payment received) is April 1, 2023, you have to pay the LVG sales tax.
New 10% sales tax does not apply to alcohol and cigarettes
The 10 per cent sales tax will apply to all LVG bought online.
The sales tax will not apply to these things purchased online at prices below RM500:
- cigarettes
- tobacco products
- smoking pipes (including pipe bowls)
- electronic cigarettes and similar personal electric vaporizing devices
- non-nicotine liquid or gel preparations used for smoking via e-cigarettes or vaping devices
- intoxicating liquor.
I’m selling, how will it affect me?
You need to register with Customs and help collect the new tax. — Malay Mail
At the moment, imported goods with a total value of less than RM500 are exempted from sales tax when it is brought in using courier services through selected airports such as KLIA, Subang, Penang, Senai, Kuching and Kota Kinabalu. Items with shipment values above RM500 are subjected to 5-10% SST and import duties between 0-25%.
