Framework for Sales Tax on Low Value Goods Launched
17 January 2023
As mentioned in our Alert issued on 16 December 2022, the Royal Malaysian Customs Department announced on 22 November 2022 that the imposition of sales tax on low value goods will be deferred from 1 January 2023 to 1 April 2023
By way of background, the imposition of sales tax on low value goods was introduced through amendments to the Sales Tax Act 2018 (‘the ‘Act
’) pursuant to the Sales Tax (Amendment) Act 20222
. Our write-up on the main requirements relating to the imposition of sales tax on low value goods under the Sales Tax (Amendment) Act 2022 while the latter was a Parliamentary Bill can be read here
Notwithstanding the deferment of the imposition of sales tax on low value goods, the framework for imposition of sales tax on such goods has been launched with the following subsidiary legislation being gazetted on 30 December 2022 and coming into operation on 1 January 2023:
In addition to the foregoing, the Royal Malaysian Customs Department has issued a Draft Guide on Sales Tax on Low Value Goods (LVG) (First Edition)
on 21 December 2022 (updated as at 9 January 2023). The guide, when issued, will supplement the framework on taxation of the sale of low value goods.
In a nutshell, arising from the gazetting of the five pieces of subsidiary legislation on 30 December 2022, a seller whose total sale value of all low value goods is not less than RM500,000 is now required to register as a registered seller under section 13 of the Act and to commence collecting sales tax on low value goods (other than exempted goods) commencing 1 April 2023.
Alert by Vanessa Ho Pei Wei (Associate) and Amanda Swee Lin Hollow (Associate) of the Corporate Practice of Skrine.
This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact firstname.lastname@example.org.
Our Alert dated 16 December 2022 can be read here
The Sales Tax (Amendment) Act 2022 was gazetted on 18 October 2022 and vide
P.U.(B) 641/2022, came into operation on 1 January 2023.
A seller of low value goods is required to be registered as a registered seller under the Act if at the end of any month: (a) the total sale value of all his low value goods in that month and the 11 months immediately preceding that month has exceeded RM500,000; or (b) there are reasonable grounds for the seller to believe that the total sale value of all his low value goods in that month and the 11 months immediately succeeding that month will exceed RM500,000, whichever is the earlier.