Following the passing of a suite of legislations, sales tax at the rate of 10% will be imposed on low value goods (i.e., all goods outside Malaysia which are sold at a price not exceeding RM 500 and brought into Malaysia via land, sea or air modes) (“LVG“) sold by a seller (i.e., a person who sells LVG on an online marketplace or operates an online marketplace for the sales and purchase of LVG) (“Seller“).
Note that the LVG sales tax obligations have extra-territorial application and extend to Sellers within and outside of Malaysia. For clarity, the LVG sales tax only applies to goods outside Malaysia sold via an online marketplace, which will be imported into Malaysia post-sale.
Key obligations in respect of the LVG sales tax are summarized as follows:
- Registration – Local and foreign Sellers, with a total LVG sale value of RM 500,000 over a 12-month period, are required to register with the Royal Malaysian Customs Department (“RMCD“). A registered seller will be assigned with an LVG registration number and will be required to charge, collect and remit sales tax on LVG.
- Display of information on package -Every registered seller is required to furnish a consignment note that contains its LVG registration number to the RMCD. The information of the consignment note must be patched or affixed on the LVG package.
- Invoicing – The invoice or document in relation to the sale of the LVG must state the following particulars (among others): (i) the total amount payable excluding sales tax; (ii) the rate of the sales tax; and (iii) total sales tax chargeable is shown as a separate amount.
While the relevant legislations have entered into force on 1 January 2023, the actual imposition of sales tax on LVG will not be enforced by the Malaysian Government at the present stage. The enforcement date was initially scheduled for 1 April 2023 but this has been postponed indefinitely as the focus of the Malaysian Government at this juncture is to have the affected stakeholders complete their LVG sales tax registration and to iron out teething issues raised by the industry.