10% Tax For Online Purchases Of Overseas Goods Under RM500 Starting 1 January
From January 2024, shoppers in Malaysia will be required to pay a 10% tax when purchasing imported low-value goods (LVG) online
The Royal Malaysian Customs Department (RMCD) recently announced that the government will impose a new sales tax on LVG sold online, with a total value of less than RM500 each.
While the new sales tax legislation on LVG came into force on 1 January 2023, the imposition of the tax on LVG will only start on 1 January 2024, according to a statement issued by the department.
This tax applies to all online sellers, whether they are based in Malaysia or overseas, who sell LVG on an online platform or operate an online marketplace where LVG is sold. It will also be applicable to goods sold under RM500 and are brought into the country by land, sea, or air.
The 10% sales tax will only apply to the actual value of the goods
This means that additional costs, such as delivery or shipping charges, insurance, etc., will not be affected.
For example, if the imported item that you're buying online is priced at RM450, you will need to pay an extra RM45 as a 10% sales tax on the item, regardless of shipping or delivery fees. So, even if the shipping fee is RM20, there won't be any extra tax on it. In total, you will be paying RM515.
RM450 (for the item) + RM45 (10% sales tax) + RM20 (delivery/shipping cost).
However, some imported items will be exempt from the new sales tax
- cigarettes and tobacco products,
- smoking pipes, including pipe bowls,
- e-cigarettes and vapes,
- non-nicotine liquid or gel preparations used for smoking via e-cigarettes or vaping devices, and
- intoxicating liquor.
Meanwhile, sellers will need to register with RMCD
Who needs to register?
According to the department's announcement, any seller — whether in Malaysia or overseas — selling goods under RM500 that are brought into Malaysia by land, sea, or air, with a total sales value of LVG exceeding RM500,000 within 12 months, needs to register as a Registered Seller.
Registration for such sellers has been open since 1 January 2023.
The new sales tax on LVG is meant to encourage Malaysians to purchase more locally made products and to level the playing field between foreign and local sellers, who are currently subject to a 5% to 10% sales tax on items sold.
To learn more about the new sales tax on LVG, check out the detailed information provided by the RMCD on its website.