Updates: Sales Tax on Imports of Low-Value Goods (“LVG”)

The Royal Malaysian Customs Department (RMCD), also known as Customs, has released Announcement LVG 1/2023 on 6 January 2023 to confirm that:

• the legislation related to Sales Tax on Low-Value Goods (“LVG”) will take effect from 1 January 2023; and

• the imposition of Sales Tax on imports of LVG will be effective from 1 April 2023.

Following the legislation related to Sales Tax on LVG:

1. any person, whether in Malaysia or a foreigner;

2. who sell Low-Value Goods (LVG);

3. brought into Malaysia by land, sea or air mode and

4. the total sales value of LVG in Malaysia exceeds RM500,000 within 12 months

is responsible for being registered as a Registered Seller (RS).

Applicants can start applying to be registered from 1 January 2023 via the MyLVG portal - https://lvg.customs.gov.my/index.php/auth/login

In accordance with the Sales Tax (Amendment) Act 2022, the Sales Tax 2018 is amended by including a new “PART IIIA” which stipulates the following:

1. “Low-Value Goods” is defined as “any prescribed goods or class of goods outside Malaysia which are sold at a price not more than a prescribed amount and brought into Malaysia in the manner as prescribed”;

2. “Seller” is defined as “a person, whether in or outside Malaysia, who sells low-value goods on an online marketplace or operates an online marketplace for the sales and purchase of low-value goods”;

3. “Registered Seller” covers “any seller registered under Section 13 of the Sales Tax Act 2018”.

The draft copy of Guide on Sales Tax on LVG

The draft copy of Guide on Sales Tax on LVG (as of 9 January 2023) defines "Online Marketplace (“OMP”)" as:

“an online platform that provides facilities for the sale and purchase of LVG, which includes a marketplace operated via the website, internet portal or gateway, distribution platform or any other type of electronic interface. This does not include payment processor/payment gateway or internet service provider”.

LVG refers to:

1. all goods;

2. the sale value of such goods shall be RM500 or less; and

3. such goods brought from outside Malaysia by land, sea or air mode into Malaysia, including SA and DA.

The Guide covers the following:-

1. Part 1 - Imposition and Scope on LVG

• Terminology

• Imposition and Scope of Tax

• Registration

• Notification of the Changes on Particulars

• Cancellation of Registration

• Accounting for Tax

• Refund of Sales Tax, Penalty, Fee or Other Money

• Remission of Penalty

• Transitional Provisions

• Other Related Information

2. Part II - Customs Clearance Procedures On The Importation Of LVG

• Terminology

• General Import Procedures

• LVG Information Requirements During Importation

• Import Declaration Via Air Mode

• Import Declaration Via Road and Sea Mode

• Importation Using Portal Service

• LVG Declaration Using The Customs Form No. 1 (K1)

• Inquiry

• Further Assistance and Information on LVG

According to the RMCD, the content of this draft guide is subject to change.

Sales Tax (Rate of Tax for Low-Value Goods) Order 2022

Sales Tax is chargeable at 10% on the sale value of LVG.

When calculating the Sales Tax payable on LVG, it is important to note that the value being considered should not include any transportation and insurance costs, as well as any tax or duties that may be chargeable or payable on the sale of LVG.

These additional costs and charges are not part of the value of the LVG being sold and, therefore, should not be included in the calculation of the Sales Tax payable.

De minimis

A treatment facility when goods imported by air using courier service (including postal service), with a total C.I.F. value not exceeding MYR500 per consignment, are exempted from Import Duties and Sales Tax on Import during importation through any airports listed under Item 94 of the Customs Duties Order (Exemption) 2017 and Item 24 of the Sales Tax (Person Exempted from Payment of Tax) 2018.

This exemption does not apply to:

• cigarettes;

• tobacco;

• intoxicating liquor;

• smoking pipes, including pipe bowls;

• electronic cigarette and similar personal electric vaporising devices; and

• preparation of a kind used for smoking through the electronic cigarette and electric vaporising device, in forms of liquid or gel, not containing nicotine

Reference

Announcement LVG 1/2023 on 6 January 2023

7. Announcement LVG 1-2023 dated 6 January 2023

.pdf

Download PDF • 84KB

The draft copy of Guide on Sales Tax on LVG

7.1 Guide on Low-Value Goods_Draft

.pdf

Download PDF • 2.85MB

Sales Tax (Rate of Tax for Low-Value Goods) Order 2022

7.2 Rates Tax (Rate Of Tax For Low-Value Goods) Order 2022

.pdf

Download PDF • 418KB

Sales Tax (Low-Value Goods) Regulations 2022 [P.U.(A) 408/2022]

7.3 Sales Tax (Low Value Goods) Regulations 2022 [P.U.(A) 408_2022]

.pdf

Download PDF • 685KB

Sales Tax (Total Sale Value of Low-Value Goods) Order 2022 [P.U.(A) 409/2022]

7.4 Sales Tax (Total Sale Value of Low-Value Goods) Order 2022 [P.U.(A) 409_2022]

.pdf

Download PDF • 410KB

Sales Tax (Determination of Low-Value Goods) Order 2022 [P.U.(A) 411/2022]

7.5 Sales Tax (Determination of Low-Value Goods) Order 2022 [P.U.(A) 411_2022]

.pdf

Download PDF • 418KB

Appointment Of Effective Date For Charging And Levying Of Sales Tax On Low-Value Goods [P.U.(B) 642/2022]

7

.6 Appointment Of Effective Date For Charging And Levying Of Sales Tax On Low-Value Goods

Download 6 APPOINTMENT OF EFFECTIVE DATE FOR CHARGING AND LEVYING OF SALES TAX ON LOW-VALUE GOODS • 568KB

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