Imported Products Purchased Online to Have Sales Tax Imposed
All imported products that are purchased online in Malaysia will soon have a sales tax imposed. This applies to all low-value goods (LVG) imported into the country.
With the Sales Tax (Amendment) Bill 2022, Malaysians can expect to pay approximately 10% in sales tax. Dewan Rakyat is expected to reach a decision and pass the bill by 4 August.
A New Section Of the Bill
Section 11A will fall under the new bill. This section defines LVG as “any prescribed goods or class of goods outside Malaysia that are purchased and brought into the country.”
The new Bill will cover sellers in and outside Malaysia. If they sell LVG online via a marketplace, the sale and purchase of the LVG will be covered by the Bill. It also applies if the sellers operate an online marketplace.
When customers make a purchase online, sellers will be able to claim the sales tax on the sale. To be covered by the new Bill, sellers of LVG products must register with Malaysia’s Finance Ministry. The details of their packages must be displayed on their LVG, per Section 11D.
Why the LVG Sales Tax?
The new tax on these imported products bought online is meant to create a level playing field. Imported products bought online should receive the same tax treatment as locally manufactured products.
What Will Be Considered Low-Value Goods (LVG)?
The Finance Ministry will determine the LVG based on the three key criteria under Section 8. They are:
- The price of these goods
- The class of goods
- How these goods are brought into Malaysia
The tax payable will be based on the price of the LVG. It will not include fees, other taxes, or other charges that are imposed on these goods. The Finance Ministry will determine when the new tax will be in place.
Need business advise for your company? Contact 3E Accounting for taxation services in Malaysia.