KUALA LUMPUR (Aug 4): The Dewan Rakyat has passed the Sales Tax (Amendment) Bill 2022, which updates the Sales Tax Act 2018 with a provision to tax low-value goods sold online and delivered to Malaysia, which is expected to bring the country an additional RM200 million tax revenue per year.
The proposed update was passed with a majority voice vote.
Deputy Finance Minister I Datuk Mohd Shahar Abdullah, who tabled the Bill for the second and third readings, said earlier that the expansion of the sales tax was one of the steps under the government's revenue sustainability initiative, which was announced in Budget 2022.
“The proposal to expand the scope is not a step backwards and Malaysia is not the only one that will or has implemented it. At the global level, countries such as Australia, New Zealand, the UK and Norway, have already imposed either goods and services tax (GST) or value added tax (VAT) on low-value goods.
"Singapore has also implemented the same thing from Jan 1, 2023 whereby goods worth S$400 (and below) are subject to GST at a rate of 7%,” he said.
According to the Paya Besar MP, taxing such goods sold online was in line with economic development and the Organization for Economic Cooperation and Development's (OECD's) International VAT/GST Guidelines published in 2017, which outlines the proposed indirect tax on transactions involving cross-border transactions in addressing the challenges of taxing the e-commerce economy.
The additional tax collected would be used for the development of the country and would benefit the people, especially the needy, he said.
Currently, low-valued goods priced RM500 and below are not subject to any tax when they are imported to Malaysia in accordance with the de minimis facility. This, however, has caused unfair treatment to local traders as locally-produced goods are subject to sales tax at a set rate, he said.
Apart from the unfair treatment, he said the de minimis facility has been taken advantage of by certain parties, who declared high value goods as low value ones worth RM500 and below to avoid being taxed.
As such, the new low value goods tax, which is targeted for implementation on Jan 1, 2023, is expected to see a flat rate of 10% being imposed on such products, he added.
Under the Bill, which was tabled for the first reading on Monday (Aug 1), sales tax will be imposed on low-value goods sold by registered sellers, or sellers liable to be registered, through online platforms and delivered to Malaysia.
The Minister may determine low-value goods based on goods or class of goods, the price of goods, and the manner in which the goods are brought into Malaysia.
For more Parliament stories, click here.