Malaysia Postpones Implementation of LVG Sales Tax Indefinitely
The Royal Malaysian Customs Department has postponed indefinitely the implementation of a new sales tax for low value goods (LVG), making online shopping less expensive for the people in the country. Learn more about the LVG sales tax and its impact on foreign and domestic sellers.
Malaysia Postpones LVG Sales Tax Implementation Indefinitely
The Royal Malaysian Customs Department has indefinitely postponed the implementation of a new sales tax for low value goods (LVG), according to a recent update posted on its website. The LVG sales tax technically came into effect on 1st January 2023, but the government announced that it would only start imposing it from 1st April 2023. However, no new date has been announced yet. The new tax will impose a 10% rate on all imported LVG, regardless of their value. This means that it will make online shopping more expensive for Malaysians.
The new tax will abolish the exemption for sales tax on imported LVG with a total value of less than RM500. The only exemptions to this new levy are cigarettes, tobacco products, smoking pipes, electronic cigarettes, vapes, non-nicotine liquids for vaping, and intoxicating liquor. 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) to collect 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. The government has already announced a planned service tax on delivery services, which has been put on hold for the time being.
Pokdepinion: Given how much the current government has done, I’m sure they wanted to make sure they are really ready to do it once it has been implemented. I suppose they just needed a bit more preparation behind the scenes.