Legislation implemented 1 Jan 2023, but imposition delayed to Mar 2023
The Royal Malaysian Customs Department has postponed the imposition of GST reforms on small parcel imports by three months until 31 March 2023.
The Malaysian Sales Tax Bill 2022 passed at the Parliament to impose Sales Tax on the imports of goods being sold to consumers under to-be-set threshold. This is expected to be RM 500 (approx $112). This will apply on sellers and digital platforms. The is an annual sales threshold of MYR 500,000, approximately US$ 115,000.
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Sales Tax on imported e-commerce low value goods
From 31 March 2023, any online sellers to consumers of imported goods shipped by air not exceeding RM500 will have to charge 10% (to be confirmed) Sales Tax in the checkout or be subject to import tax. Currently, 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.
The threshold value will not include other collected taxes. Although this is to be confirmed. Where consignments are above this threshold, Sales Tax will be collected as today at Customs.
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.
Like Australia, there may be an annual sales registration threshold for effected sellers and marketplaces. 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.
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.