Malaysia Will Levy Sales Tax on Low Value Goods Beginning in April 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 (“LVG”) 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.
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