Changes are being made to the Sales Tax Act 2018 in phases to impose sales tax on low value goods. The changes are effected pursuant to the Sales Tax (Amendment) Act 2022 and the relevant regulations and orders issued thereunder (with provisions effective from 1 January 2023 and 1 April 2023 respectively). This is in line with the announcement made by the Ministry of Finance in Budget 2022 to ensure a level playing field and fair treatment between taxable goods manufactured in Malaysia and imported goods, as local manufacturers are already being charged a 5% or 10% sales tax.
Low value goods are goods from outside Malaysia which have a sale value of not more than RM500 and are brought into Malaysia by land, sea or air. Pursuant to the Guide on Sales Tax on Low Value Goods issued by the Royal Malaysian Customs Department, the low value goods tax is mainly intended to implement sales tax on low value goods sold through online marketplaces. Therefore, these changes will heavily impact e-commerce businesses where low value goods are sold through an online marketplace and imported into Malaysia in the prescribed manner.
In this Update we provide a brief summary of the low value goods tax and highlight the relevance for e-commerce businesses.
For more information, click here to read the full Legal Update.
