Malaysians would have to fork out more for their daily expenses in the near future as the government will soon impose a sales tax on all imported low-value goods (LVG) that they purchase online.
This came after the Finance ministry proposed an amendment to the Sales Tax Act 2018 to tax LVG sales through the Sales Tax (Amendment) Bill 2022.
According to The Star, Deputy Finance Minister II Yamani Hafez Musa has tabled the Bill for its first reading on Monday (1 August) and it is expected to be passed by Dewan Rakyat this current meeting which ends on 4 August.
Under the Bill, a new Section 11A will be created which will define LVG as “any prescribed goods or class of goods outside Malaysia which are sold and brought into Malaysia”.
This new amendment will cover both sellers, both in or outside Malaysia, who sell LVG on the “online marketplace or operate an online marketplace” for the sale and purchase of LVG.
This means that all LVG sellers will have to register themselves with the Finance Ministry.
Meanwhile, sellers are also required to display their particulars on the packages of their LVG under Section 11D.
What is considered LVG?
According to the Finance Minister, the determination of LVG will be based on 3 main criteria under Section 8.
These criteria include the goods or class of goods, the price of the goods and the manner in which the goods are brought into the country.
The sale value of LVG on which tax becomes payable shall be the price of the LVG not including any other taxes, fees or other charges imposed on the LVG.
At the moment, the commencement of the new LVG tax is yet to be determined by the Finance Minister.
Why should LVG be taxed?
According to Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz, a tax on LVG should be imposed to provide a level playing field for locally manufactured goods.
He said that local manufacturers are currently taxed a 5% or 10% sales tax.
Nonetheless, the new LVG tax is expected to be implemented by this coming year and is expected to impose a flat rate of 10% to both resident and foreign sellers offering such products.
A mechanism will be put in place to allow registered sellers to collect the tax when customers make their purchases online.
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