Malaysia Will Levy Sales Tax on Low Value Goods Beginning in April 2023

February 15, 2023

Malaysia will impose sales tax on imported low value goods sold online beginning on April 1, 2023.

Timeline

Although the implementation of sales tax on low value goods took effect from January 1, 2023, the imposition of sales tax has been delayed until April 1, 2023.

Overview of the regulations

Low Value Goods (‚ÄúLVG‚ÄĚ) are goods from outside Malaysia sold directly online or through an online marketplace at a price not exceeding RM 500 (approx. USD $116) and brought to Malaysia by air, sea, or land.

Transactions covered 

The new rules only apply to goods ordered on or after April 1, 2023. It covers both B2B and B2C transactions as long as the goods satisfy the definition of LVG.

Taxpayers in scope

It will affect non-resident and resident businesses selling directly to customers online and online marketplaces facilitating the sale of LVG between the seller and the customers.

If a business sells directly to customers online, it will be liable for any tax obligations. However, when a marketplace facilitates the sale of LVG between the seller and the customer, the marketplace will bear the tax liability instead.

Thresholds

LVG: RM 500 (approx. USD $116), excluding taxes, duties, transportation, and insurance costs

Registration: RM 500,000 (approx. USD $116,000) over a 12-month period (not a calendar year). Registration must be made online through the MyLVG website.

Tax rate

The sales tax rate for LVG is 10%.

What happens when you register

After exceeding the threshold and having to register in Malaysia, taxpayers must issue locally compliant invoices in the local language (or English) and file quarterly returns. Returns and payment of sales tax are due by the last day of the month following the tax period.

Taxpayers must also keep records in the local language (or English) for seven years.

‚ÄćHow Fonoa can help

Fonoa is a global tax automation and compliance solution provider that helps companies automate their tax processes in a digital, borderless economy. Our easy-to-integrate solution automatically keeps track of changing rates and rules to help your business stay compliant. And yes, it will also save your company money. Get in touch to find out more. 

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Mil√°n Z√°modics
Tax Researcher

Mil√°n is an indirect tax professional specialized in VAT and tax compliance. Before joining Fonoa, he worked at EY Hungary, providing indirect tax advisory and compliance services for a wide range of international and local clients from all industries. He also worked with digital tax products that automate tax processes.