New Guide and FAQs for delayed imposition of Sales Tax and duties on B2C low value goods goes ahead 1 January 2024
Reforms to sales tax on small value packages have now been confirmed for 1 January 2024. The Royal Malaysian Customs Department has last week issued a new guide for sellers and marketplaces. It covers: scope of the new regime; Sales Tax registration procedures; accounting and record keeping for Sales Tax; refunds; penalty regime; importation procedures
The Malaysian Sales Tax Bill, passed in the Parliament in 2022, imposes 10% Sales Tax on the imports of goods being sold to consumers under a de minimis threshold. This is RM 500 (approx $112) valued at CIF (Cost + Insurance + Freight). This applies to sellers (‘Registered Sellers’) and digital platforms facilitating Registered Sellers. There is an annual sales threshold of MYR 500,000, approximately US$ 115,000. Local equivalent sales of goods may be at lower rates of 5% or 0% depending on the HS Code classification – but this does not apply to imports which are all subject to 10%. Excise goods (e.g. cigerettes) are not included.
The Malaysian Customs Department has issued a FAQ‘s to help sellers and marketplaces.
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Sales Tax on imported e-commerce low value goods
Any online sellers or facilitating marketplaces selling to consumers imported goods shipped by air RM500 will have to charge 10% Sales Tax in the checkout or be subject to import tax. Previously, such sales are exempt. Both resident sellers and foreign will be required to follow this new obligation – meaning non-resident tax registrations for foreign sellers. It is not yet clear how collections online will be coordinated with border control to prevent double taxation.
Sellers are required to complete a consignment note with the goods being imported, clearly indicating their tax registration number. Returns are completed in a by-monthly basis.
This follows the examples of shifting the import tax burden from the border customs control to the checkout in jurisdictions including Australia, New Zealand and the EU e-commerce package.
Once registered to report collected import Sales Tax, non-residents will be expected to file each quarter. They will have to submit their return and Sales Tax collected by the end of the following month. This is payable in Ringgit Malaysia.
Malaysia’s Sales Tax and Services Tax (SST)
Malaysia’s operates two main consumption taxes:
- 10% Sales Tax (lower 5% on certain supplies such as Basic foodstuff; construction supplies; telecoms and IT; oil
- 6% Service Tax. This included digital services provided by non-residents from January 2020.
SST was temporarily replaced by a Goods and Services Tax (GST) between April 2015 and September 2018.
