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Malaysia's New 10% Online Sales Tax: Low Value Goods (LVG) Tax

The Malaysia's New 10% Online Sales Tax: Low Value Goods (LVG) Tax will be implemented from the 1st of January 2024. Are you ready? What is LVG tax?
Malaysia's New 10% Online Sales Tax: Low Value Goods (LVG) Tax

To those who enjoy or prefer shopping online, your days are numbered before the implementation of the new LVG (Low Value Goods) Tax by our beloved Malaysian government.  Yes! The dreaded new  10% online sales tax will be kicking in real soon! It's time to mark your calendars and set those reminders because as of 1 January 2024, Malaysia is rolling out a new 10% online sales tax.

Malaysia's New 10% Online Sales Tax: Low Value Goods (LVG) Tax

Then again, this isn't just any update; it's a pivotal shift in the online marketplace that's been brewing since legislation was passed last year by our government. It's had its share of delays, originally intended for April 2023, but like a stage curtain finally rising, it’s making its grand entrance at the start of next year-2024! So are you ready for the new 10% Online Sales Tax aka LVG Tax?

Malaysia's New 10% Online Sales Tax The Dreaded Low Value Goods (LVG) Tax

Decoding the Low Value Goods (LVG) Tax

Let's dissect what this LVG tax is all about, shall we? It encompasses all imported goods sold for RM500 or less and includes those arriving by land, sea, or air. These are the everyday items that fill our online shopping baskets—clothes, gadgets, books, you name it. For e-commerce sellers who have hit the RM500,000 mark in annual sales over 12 months, registering as an LVG seller is now on your to-do list, whether you're a local hero or an international player.

Exemptions and Intricacies: The Devil's in the Details

Interestingly enough, not every product will feel the pinch of this new tax. The government has carved out exceptions for certain vices—tobacco goods, alcoholic beverages, and the like are off the hook. Now, when we talk about the 10% rate, remember it’s levied solely on the sale value of an item. So if you’ve been enjoying tax-free shopping for items under RM500 thanks to the de minimis rule, that party isn't over just yet.

Low Value Goods (LVG) Tax

The Catch: Understanding Total Value Assessments

But before you get too comfortable, there's a catch that could affect your pocket. If your total purchase cost—including insurance and shipping—exceeds RM500, then you'll bid adieu to the de minimis exemption. This means both online sales tax and import duties will come knocking. And for those importing through less conventional means like road or sea? You're automatically on the hook for both taxes.

E-commerce Platforms: The Unanswered Questions

The burning question on everyone’s mind is how major e-commerce players like Shopee and Lazada will integrate this tax into their systems. As of my latest scroll through their help centres, the mystery remains unsolved. But rest assured, they’re likely brainstorming ways to make this transition as smooth as possible for sellers and buyers alike.

Malaysia Low Value Goods (LVG) Tax

A Spotlight on Local Products

Now, let's address the elephant in the room: why introduce this tax at all? Communications Minister Fahmi Fadzil has shed some light on this decision—it's about giving local products a competitive edge in the market by leveling the playing field against imported goods.

Delving Deeper: Effects on Sellers and Buyers

For sellers, particularly those who aren't big fans of paperwork, embracing this change means getting to grips with new regulations. It might mean adjusting prices or absorbing costs to stay competitive. Onboarding processes might need tweaking to ensure compliance with registration requirements.

Malaysia Low Value Goods (LVG) Tax

Buyers might feel a tug on their purse strings as the additional 10% could sway their buying choices. This could lead to an increased interest in locally sourced alternatives—potentially boosting Malaysia’s domestic economy.

The Road Ahead: Adapting to Change

Change can be daunting, but it also brings opportunity. For sellers, this could mean reassessing shipping strategies or finding innovative ways to offer value to customers. Buyers might become more discerning, seeking out the best deals or supporting local businesses more fervently.

Malaysia Low Value Goods (LVG) Tax

Rest assured that I will be keeping you in the loop (hopefully) with all things e-commerce in Malaysia. I am committed to providing timely updates and insights on how this new tax landscape will unfold as I will be affected as well! LOL 😁

In Conclusion

So there we have it—a comprehensive look at what's coming down the pipeline for Malaysia's online sales sphere. Whether you're a small-time seller or a serial shopper like me, staying informed is your best strategy as we approach these new regulatory horizons. There is no doubt that this new 10% online sales tax will be a huge gamer changer in the way we shop. So, what are you thoughts about this new Low Value Goods (LVF) Tax? Yay or nay?

Images credit: Shutterstock

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Tekkaus® | Malaysia Lifestyle Blogger | Influencer: Malaysia's New 10% Online Sales Tax: Low Value Goods (LVG) Tax
Malaysia's New 10% Online Sales Tax: Low Value Goods (LVG) Tax
The Malaysia's New 10% Online Sales Tax: Low Value Goods (LVG) Tax will be implemented from the 1st of January 2024. Are you ready? What is LVG tax?
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