In the Malaysian Budget 2022, the Ministry of Finance announced its intention to ensure a level playing field and fair treatment between taxable goods manufactured in Malaysia and imported goods. In line with this, changes are being made to the Sales Tax Act 2018 ("STA") pursuant to the Sales Tax (Amendment) Act 2022. This is being done in phases, to impose sales tax on low value goods ("LVG"), i.e. goods from outside Malaysia which have a sale value of not more than RM500 and which are brought into Malaysia by land, sea or air.
Amongst the key amendments introduced by the STA in respect of the LVG tax include the following:
(a) registration requirements on both foreign and local sellers of LVG which exceed RM500,000 in total sales value within 12 months;
(b) the rate of LVG sales tax is fixed at 10%; and
(c) LVG sales tax becomes payable when the LVG is sold by the registered seller who is required to issue an invoice or such document containing the prescribed particulars under the STA to the consumer.
The imposition of the LVG sales tax was originally scheduled to take effect on 1 April 2023; however, the Royal Malaysian Customs Department ("RMCD") has recently announced the postponement of the effective date. As at the date of this write-up, RMCD has yet to provide a further update on the new effective date for the imposition of the LVG sales tax.
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