Low-Value Goods (LVG) Import Tax Policy of Malaysia

As of January 1, 2024, for any goods valuing less than MYR500 (hereinafter referred to the low-value goods/LVG) purchased online and shipped to Malaysia from the other countries all over the world, it is necessary to pay 10% SST immediately at the time of purchase.

The requirement is only applicable to the e-commerce platforms which meet the following minimum standards:

(1) The gross sales of the LVG imported to Malaysia within 12 months are more than MYR500,000,

(2) and the LVG have been registered with the customs authority of Malaysia.

Where the e-commerce platforms fail to satisfy said standards or complete the registration with the customs authority of Malaysia, the SST de minimis policy for LVG still applies (same as the existing custom clearance preferential policy for Malaysia).

 

I. How will the sender be affected?

Where the e-commerce platform engaged in sale and shipment to consumers in Malaysia meets the threshold defined by the customs authority of Malaysia (namely, the gross sales of the LVG imported to Malaysia within 12 months are more than MYR500,000), it shall comply with the requirements under the Malaysia government policy:

It is necessary to apply with the customs authority of Malaysia for the status of “registered seller” and also the LVG registered number (hereinafter referred to as “LRN”). Note: This is a one-time registration which may be completed as of January 1, 2023.

  • 10% sales and service tax (SST) shall be levied on the goods valuing less than MYR500 at the time of transaction (i.e. at the time of consumers’ purchase online).
  • The LVG registration number (LRN) shall be included into all commercial invoices issued for imposition of the SST at the time of purchase.
  • It is necessary to complete and file with the customs authority of Malaysia the SST return and make payment to the authority, regularly.

 

Tips:

1. The registered seller (RS) shall connect the order placement tool via SF Express IUOP or BSP, and provide the complete and accurate commercial invoice data in an electronic form, including the LVG registration number (LRN).

2. Where it is impossible to provide the LVG registration number (LRN) at the time of sending the shipment, additional SST might be levied at the time of import.

 

II. What should the sender do to avoid delay?

In order to avoid delay and ensure good customer experience, the following issues are of essence to the e-commerce platforms engaged in sale of LVG to Malaysia:

 

  • Must understand the tax changes in Malaysia customs and verify whether they apply to your business. If you satisfy the standards, you shall register with the customs authority of Malaysia for system update, in order to collect the SST on LVG (product valuing less than MYR500) from consumers in Malaysia at the time of transaction.
  • You are suggested to provide the complete and accurate commercial invoice data in an electronic form, including the LVG registration number (LRN).

 

III. FAQ

1. What if an e-commerce platform sells and ships LVG Malaysia from the other countries in the world but fails to satisfy the minimum standards about the application for the LRN? Or, what if it satisfies the standards but fails to complete the registration with the customs authority of Malaysia?

The e-commerce platform which fails to satisfy the minimum standards about the application for LRN (namely, the gross sales of the LVG imported to Malaysia within 12 months are more than MYR500,000) or satisfies the standards but fails to complete the registration with the customs authority of Malaysia doesn’t need to pay the SST (subject to the existing same policy).

 

2. Are there any changes in the business-to-business (B2B) engaged in sale of the LVG to Malaysia via e-commerce platforms all over the world?

(1) If the seller is an e-commerce platform engaged in sale and shipping of LVG (namely, products valuing less than MYR500) to Malaysia from the other countries all over the world, the tax changes may also apply to the B2B transactions. Under such circumstances, the SST levied on the products valuing less than MYR500 must be collected by a registered e-commerce platform at the time of transaction.

(2) The B2B shipment sold via any channels other than e-commerce platforms: The current procedures remain unchanged.

 

3. What impact will be posed by failure to comply with the new requirement?

Failure to comply with the requirement of the customs authority of Malaysia might result in the following consequences:

  • Shipment might be delayed.
  • Your shipment might be detained in the customs warehouse.
  • The Malaysia customs might levy the SST again at the time of import, and double taxation arises accordingly.
  • The Malaysia customs might impose certain punishment.

 

4. What happens if the e-commerce platform collects the SST from a buyer of LVG in error at the time of purchase?

If the amount of SST collected by the e-commerce platform from the buyer is found in error, the buyer shall feed the difference back to the e-commerce platform directly.

The e-commerce platform (RS) is responsible for calculating the SST to be levied at the time of purchase.

 

For an e-commerce platform which is a “RS,” ifthe SST in error meets the following conditions, it may apply for tax refund with the competent authority of Malaysia in accordance with Article 39 of the 2018 Sales Tax Act:

a) Overpayment of the amount due referred to in the return; or b) Payment in error.

 

Note: SF is not responsible for settling the dispute over double taxation or refund. Please file the complaint with the local government in Malaysia directly.

 

5. How the LVG SST is calculated?

10% SST shall be levied on the LVG.

The SST is levied based on the sales of LVG, but excluding the following:

  • Insurance premium (namely, the shipping and insurance expenses collected by the customer)
  • Any import duty or SST to be collected and payable at the time of sale of LVG.

 

6. How the import duty will be affected?

All of the current import duty procedures will be maintained. That is:

  • If the consignment values less than MYR 500 (excluding alcohol or tobacco related products): The cargo will be cleared at the border, so no payment of import duty will be required.
  • For the consignment valuing more than MYR 500, it is necessary to pay the import duty as same as that applicable under the existing policy.

 

7. When the SST on LVG imported to Malaysia may not apply to the Malaysia customs?

It cannot apply in the following circumstances:

  • Documents
  • The B2B transactions via any channels other than e-commerce platforms

 

8. Where can I find more information?

 

Should you need more information about the requirement, please contact the customs authority of Malaysia (Royal Malaysian Customs Department, RMCD).

(E-mail: mylvg@customs.gov.my)