The Royal Malaysian Customs Department (“RMCD
”) has announced that the imposition of sales tax on low value goods, i.e. all goods that are sold online at a price not exceeding RM500 and are brought into Malaysia by land, sea or air (“LVG
”), will commence on 1 January 2024
. This announcement follows a series of deferrals, with previous announcements indicating sales tax imposition dates of 1 January 2023, 1 April 2023
and a subsequent date
to be announced following the revocation of the 1 April 2023 commencement date. The RMCD announcement can be read here
To recap, the rate of sales tax to be imposed on LVG is 10% and any person within or outside Malaysia who sells LVG on an online platform
or operates an online platform for the sale of LVG is required to be registered under the Sales Tax Act 2018 and be accountable to collect sales tax on LVG if their total sales or prospective total sales of LVG exceeds the prescribed threshold of RM500,000
. Our previous articles on sales tax on LVG can be accessed here
Accompanying the recent announcement, the RMCD has issued a new Guide: Sales Tax on Low Value Goods (LVG)
”) dated 3 November 2023, and a set of Frequently Asked Questions
”) on the Implementation of Sales Tax on LVG dated 6 November 2023.
Any person who sells LVG through an online platform or operates an online platform for the sale of LVG is encouraged to use the Guide and FAQ as a reference.
Alert by Victoria Low (Associate) of the Tax Practice of Skrine.
The term “online marketplace” in the Sales Tax Act 2018 will be amended to “online platform” when the Finance (No. 2) Bill 2023 becomes law and comes into operation. In addition, as per the new section 11E to be inserted through the Finance (No.2) Bill 2023, sales tax on importation shall not apply to LVG if it is proven to the proper officer of sales tax that sales tax on LVG has been charged by the registered seller and being paid on the LVG.
The liability to be registered is explained further under section 12 (as modified by the Schedule) of the Sales Tax Act 2018 and section 4 of the Guide.