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Postponement of the Implementation of Sales Tax on imported LVG
According to an announcement from the Royal Malaysian Customs Department (“RMCD”), the implementation of Sales Tax on imported LVG that was originally scheduled to take effect on 1 April 2023, has been postponed.
The RMCD has yet to provide a new date on when the Sales Tax on LVG will be implemented. We will keep you informed of any further developments with regard to this matter.
Malaysia Imposes 10% Sales Tax on Imported Low Value Goods (“LVG”)
From 1 April 2023, all registered sellers will be charged with a flat rate of 10% Sales Tax on the LVG imported into Malaysia.
Currently, all taxable goods manufactured locally or goods imported into Malaysia from abroad are subject to Sales Tax. However, LVG which are imported from overseas via air courier are not subject to such Sales Tax due to the de minimis facility. This facility allows for small amounts of taxes to be waived for efficiency purposes. However, this facility has created a disadvantage for local manufacturers, as their LVG are still subjected to Sales Tax.
To level the playing field between locally manufactured LVG and imported LVG, the Malaysian government has announced that the imported LVG sold online by sellers will be subject to Sales Tax starting from 1 April 2023.
This move aligns with other countries like Australia, New Zealand, Singapore, etc. which have already imposed Goods and Services Tax (“GST”) or Value Added Tax (“VAT”) on imported LVG.
Sales Tax on imported Low Value Goods (“LVG”)
Definition of LVG
LVG are defined as goods with a sales value of RM500 or below and such goods are brought into Malaysia via land, sea or air.
The sales value for LVG refers to the selling price of the goods, excluding the transportation costs, insurance costs and any taxes or duties payable to the Royal Malaysian Customs Department (“RMCD”).
For example, imported goods are priced at RM490. The shipping and delivery fee is RM20. Since the sales value of the imported goods is less than RM500, the said goods should be classified as LVG for Sales Tax purposes.
Liability to be registered for Sales Tax on LVG
Sellers (both in or outside Malaysia) who sell imported LVG through an online marketplace are required to register for the Sales Tax if the annual sale value of LVG exceeds RM500,000.
Sellers who meet the registration criteria can start applying for registration from the RMCD now.
Customs declaration on LVG
To avoid paying the Sales Tax upon the importation of the LVG into Malaysia, the registered sellers must display their Sales Tax registration number on the package of the LVG and issue the invoice with the required information. The registered sellers must also declare the necessary information and provide the relevant documents to the RMCD at the point of importation.
There are four (4) steps for sellers to follow:
Key notes for purchasers:
What can Crowe Malaysia offer to you?
Our Services for Sales Tax on LVG are:
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