10 pct tax on online overseas purchases under RM500 starting April 1

Online shopping — DayakDaily.com file pic. // Photo: Pixabay

KUCHING, Jan 9: A new sales tax effective April 1, 2023 will see Malaysian consumers paying 10 per cent more when purchasing imported goods costing under RM500.

Source: Royal Malaysian Customs Department

According to a MalayMail news report, the Malaysian government will impose a 10 per cent sales tax on “low-value goods” (LVG), which are goods priced less than RM500 and sold online and delivered to customers in Malaysia by air, sea, or land from overseas.

The 10 per cent sales tax also applies to duty-free islands such as Labuan, Langkawi, Tioman, and Pangkor, as well as special areas such as free zones.

The tax, however, will not be imposed on delivery or insurance costs for bringing the item into Malaysia from overseas.

Based on the Royal Malaysian Customs Department’s (RMCD) draft tax guide as of Jan 1, for example, individuals purchasing a product from overseas via an online shopping platform for RM490 plus a RM10 delivery fee will pay RM500 if the purchase is made before April.

With the new sales tax in effect starting April, buyers will pay RM490 plus RM49 (10 per cent sales tax) plus the RM10 delivery fee, for a total of RM549.

The LVG sales tax will be charged at the time the order confirmation is issued by the online shopping platform.

Meanwhile, the new sales tax does not apply to online purchases of alcohol and cigarettes for less than RM500.

This includes cigarettes, tobacco products, smoking pipes (including pipe bowls), electronic cigarettes and similar personal electric vaporising devices, non-nicotine liquid or gel preparations used for smoking via e-cigarettes or vaping devices, and intoxicating liquor.

Currently, imported goods with a total value of less than RM500 are exempt from sales tax when brought in via courier services through KLIA, Subang, Penang, Senai, Kuching, and Kota Kinabalu airports.

Items with shipment values exceeding RM500 are subject to 5-10 per cent SST and 0-25 per cent import duties.

On Aug 4, 2022, the Dewan Rakyat passed the Sales Tax (Amendment) Bill 2022 imposing a 10 per cent tax on imported LVGs which are sold by foreign sellers.

The bill received a majority voice vote and was approved after a debate involving seven Members of Parliament. — DayakDaily