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Starting from 1st April this year, Malaysians will be required to pay a further 10% tax on all online purchases of imported "Low Value Goods" (LVG). This is part of the Sales Tax (Amendment) Act 2022 legislated by the government on items that have a total value of less than RM500 per consignment and are sold by overseas-based sellers, as announced by the Royal Malaysian Customs Department.
Although the legislation governing Sales Tax on Low Value Goods (LVG) went into effect on January 1, 2023, the effective date for charging and levying sales tax on Low Value Goods will be April 1 2023.
Fret not, delivery or shipping costs, insurance, and so on are not included in the 10% sales tax that will be applied to the merchandise's value. Moreover, it is not necessary for you to pay the extra 10% LVG sales tax if you ordered the goods online before April 1, 2023, even if they are delivered to you after that date.
The extra 10% sales tax is subject to future online purchases, however, won't affect the purchase of some imported items if they are purchased online at prices below RM500. Such items include:
- Cigarettes and 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
What about sellers? How will the soon-to-be imposed sales tax affect them?
Well, the Royal Malaysian Customs Department announced on 6th January that any seller, local or foreign, whose LVG in a 12-month period exceeds RM500,000 due to goods sold for less than RM500 and imported into Malaysia via land, sea, or air must register as a Registered Seller (RS).
Since January 1st, registration has been open to vendors.