MALAYSIANS will soon have to pay taxes on imported low value goods (LVG) they buy online. This follows proposed changes to the VAT Act 2018 for the taxation of the LVG by the VAT (Amendment) Act 2022.
The bill was tabled for first reading by Deputy Finance Minister II Yamani Hafez Musa and is expected to be passed by Dewan Rakyat at this latest meeting, which ends Thursday.
Under the proposed law, a new Section 11A defines LVG as any regulated goods or class of goods sold outside Malaysia and brought into Malaysia.
The new law applies to both local and foreign sellers who sell or operate an online marketplace for LVG on an “online marketplace” for the sale and purchase of LVG.
LVG sellers must register with the Treasury. They must also put their information on the packaging of their LVG in accordance with Section 11d.
The determination of the LGV is made by the Minister of Finance based on three main criteria as set out in Section 8.
These criteria are the goods or classes of goods, the price of the goods and the manner in which the goods are brought into the country.
The sales value of the Carrier on which taxes are payable is the price of the Carrier excluding any other taxes, fees or other charges imposed on the Carrier.
The Minister of Finance will determine when the new LVG tax will come into force.
Last year, when Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz presented the 2022 budget, he said the LVG would be taxed.
The aim of the tax is to create a level playing field for locally produced goods.
The LVG ensures that locally manufactured and imported goods are treated equally for tax purposes.
Local manufacturers are currently taxed at either 5% or 10% sales tax.
The new LVG is due to be introduced next January 1st and is expected to impose a flat rate of 10% on both local and overseas sellers offering such products.
A mechanism will be put in place to allow registered sellers to collect the tax when customers make their purchases online.