If you’re an enthusiastic online shopper who enjoys purchasing imported goods from abroad, it’s time to act swiftly before the new year arrives. Starting on January 1, 2024, the Malaysian government is set to impose a 10% sales tax on low-value goods (LVG) imported and sold online within Malaysia. This tax applies to any product valued at less than RM500 originating from outside the country.
Understanding LVG and Its Taxation
LVG encompasses all goods, excluding cigarettes, tobacco products, alcoholic beverages, electronic cigarettes, and similar smoking-related devices, with a price not exceeding RM500, imported into Malaysia through land, sea, or air. This tax does not cover local products, delivery charges, or insurance costs associated with importing goods.
Initially introduced in Budget 2022, the tax was originally slated for implementation in April 2023. However, due to the COVID-19 pandemic and economic recovery efforts, the government decided to postpone it until January 1, 2024. According to the Minister of Communication, Fahmi Fadzil, the tax aims to create a level playing field for local businesses and incentivize them to compete effectively in the online marketplace.
Implications for Online Shoppers
This tax will impact online shoppers who purchase imported goods from platforms like Shopee, Lazada, Amazon, AliExpress, and others. For instance, if you buy a pair of shoes from China priced at RM100, you will be required to pay an additional RM10 as tax. Similarly, if you purchase a smartphone from the US worth RM400, an extra RM40 in tax will apply.
However, shoppers will not be subject to this tax if they buy local products or products exceeding RM500 in value. For example, if you buy a handbag from Malaysia priced at RM200, no tax will be levied. The same exemption applies if you acquire a laptop from Japan costing RM2,000.
Tips to Save Money Before the Tax Takes Effect
To save money on imported online goods before the tax comes into play, consider these strategies:
- Make your purchases before the year’s end to capitalize on year-end sales and promotions while avoiding the 10% tax.
- Compare prices across various platforms and sellers to identify cost-effective deals, free shipping, or discounts.
- Explore local or domestically sourced alternatives, which may offer comparable or superior quality while supporting local businesses.
- Prior to making a purchase, review product and seller ratings to steer clear of subpar or counterfeit products that could be a waste of money or cause issues down the line.
As of January 1, 2024, Malaysia will enforce a new 10% sales tax on LVG imported and sold online, impacting goods valued at less than RM500 from outside the country. Nevertheless, there are methods to economize on online imported goods before the tax is introduced. By acting promptly, comparing prices, considering local alternatives, and conducting thorough product and seller assessments, you can make the most of your online shopping experience.