Deferment of imposition of sales tax on low-value goods (LVG)

Sales Tax applies to all taxable goods produced domestically or imported from other countries into Malaysia.

Nevertheless, Low-Value Goods (LVG) imported by air couriers from overseas are exempt from Sales Tax under the de minimis facility, which permits a waiver of small tax amounts for efficiency reasons.

The Ministry of Finance announced in Budget 2022 that Low-Value goods (LVG) not exceeding RM500 from abroad sold online by sellers and delivered to consumers in Malaysia are subject to sales tax with effect from 1 January 2023. This ensures a level playing field and fair treatment between all LVG purchased overseas or locally.

This change aligns with other countries, such as Australia, New Zealand, and Singapore, that have already imposed Value Added Tax (VAT) or Goods and Services Tax (GST) on imported LVG.

The Royal Malaysian Customs Department (RMCD) has announced that the imposition of sales tax on low-value goods, originally scheduled to be effective from 1 April 2023, has been postponed to a later date to be determined.

The full announcement can be accessed on the RMCD website.