FAQ: Implementation of Sales Tax on Low Value Goods (LVG)
Royal Malaysian Customs Department has issued Frequent Asked Quetion (FAQ) on the Implemenation of Sales Tax on Low Value Goods (LVG) on 6 November 2023. We have extract the important points that Micro, Small and Medium Enterprises (SME) need to take note on the implementation.
SCOPR AND IMPOSITION ON LVG
When is the sales tax imposition date on LVG?
The imposition of sales tax on LVG will start on 1 January 2024.
What is meant by LVG?
Goods which are sold at a price not exceeding RM500 and are brought into Malaysia by land, sea or air. Excluding:
The sales tax rate on LVG is 10%.
In the context of LVG, who is the seller?
"Seller" means a person, whether inside or outside Malaysia, who:
Online platform refers to a platform that provides facilities for the sale and purchase of LVG which includes marketplace operated via website, internet portal or gateway.
What is the threshold value for LVG sellers to be registered under the Sales Tax Act 2018 (LVG)?
LVG sellers shall register if the total sale value of LVG brought into Malaysia exceeds RM500,000 in 12 months.
How to register as registered seller (RS)?
A seller may apply for registration with effect from 1 January 2023. Application shall be made via https://lvg.customs.gov.my .
When and how does RS need to submit a return for sales tax on LVG?
RS needs to submit a return for sales tax on LVG every three (3) months according to the taxable period by filing in the LVG-02 form via https://lvg.customs.gov.my.
Which currency should be used when submitting the return and payment?
Ringgit Malaysia (RM).
What is the source reference for currency exchange?
RS may use one (1) of the following suggested prevailing acceptable exchange rates and shall use it consistently:
Yes. RS is allowed to issue credit note or debit note under the following situations:
Only RS living abroad is allowed to keep documents or records related to sales tax on LVG outside Malaysia as long as the records are accessible.
RS is responsible for keeping records related to LVG transactions for seven (7) years from the last date related to those records.
CUSTOMS CLEARANCE PROCEDURES ON THE IMPORTATION OF LVG
Does the LVG imported to Malaysia still need to comply with the existing import procedure?
Yes, LVG imported into Malaysia is still subject to the existing import procedures as it remains unchanged. Prohibited goods may require permits/approvals from relevant agencies prior to the goods arrival. Goods may also be screened, inspected, or examined prior to their release.
Is the de minimis facility that currently exempts Import Duty and Sales Tax on Imports for goods at a CIF (Cost + Insurance + Freight) value not exceeding RM500 consignment sent to Malaysia using air courier services still applicable?
The de minimis facility under Item 94, Part I of the Schedule, Customs Duties (Exemption) Order 2017 and Item 24, Schedule A, Sales Tax (Persons Exempted from Payment of Tax) Order 2018 is still applicable.
What are the addtional customs requirements for LVG importation?
During the importation of LVG, the LVG Registration Number information must be provided by the importer/customs agent in the import declaration (e.g., Customs Form No.1 (K1), electronic pre-alert system (e-PAM) or consignment note (CN22/CN23). Any supporting documents must also be provided upon request by the proper officer of customs.
Asma brought LVG valued at RM300 from a Registered Seller (RS) outside Malaysia and has been charged Sales Tax on LVG. The goods do not fall under the prohibited category and will be shipped to Malaysia by air using a courier service. Will there be any addtional duties/taxes charged upon importation?
No additional duties or taxes will be charged upon importation as the goods imported are entitled to de minimis.
What are the consequences if the RS/exporters/customs agent fail to provide the LVG Registration Number for imported LVG?
Goods declared without any LVG Registration Number information will be charged Sales Tax on Imports (if applicable) during importation.
Zaris bought two (2) sets of the same kitchenware items for RM300 each and a plastic box for RM50 from RS. These goods will be shipped in the same consignment package to Malaysia using air courier service. How does the LVG treatment work under this scenario?
This consignment exceeds the de minimis value (CIF RM500). Therefore, this consignment will be subjected to Import Duties and Sales Tax on Imports (if applicable). However, since Sales Tax on LVG has been charged by the RS at the point of sale on both line items, Sales Tax on Imports will not be charged upon importation. Only Import Duties will be charged upon importation on both line items.
Please do not hesitate to contact us for more information:
Ten Jia Sheng
014-911 1880
jsten@jsc-corp.com
SCOPR AND IMPOSITION ON LVG
When is the sales tax imposition date on LVG?
The imposition of sales tax on LVG will start on 1 January 2024.
What is meant by LVG?
Goods which are sold at a price not exceeding RM500 and are brought into Malaysia by land, sea or air. Excluding:
- Cigarettes;
- Tobacco products;
- Intoxicating liquors;
- Smoking pipes (including pipe bowls);
- Electronic cigarettes and similar personal electric vaporizing devices; and
- Preparation of a kind used for smoking through electronic cigarette and electric vaporizing device, in forms of liquid of gel, whether or not containing nicotine.
The sales tax rate on LVG is 10%.
In the context of LVG, who is the seller?
"Seller" means a person, whether inside or outside Malaysia, who:
- Sells LVG on an online platform; or
- Operates an online marketplace for the sale and purchase of LVG.
Online platform refers to a platform that provides facilities for the sale and purchase of LVG which includes marketplace operated via website, internet portal or gateway.
What is the threshold value for LVG sellers to be registered under the Sales Tax Act 2018 (LVG)?
LVG sellers shall register if the total sale value of LVG brought into Malaysia exceeds RM500,000 in 12 months.
How to register as registered seller (RS)?
A seller may apply for registration with effect from 1 January 2023. Application shall be made via https://lvg.customs.gov.my .
When and how does RS need to submit a return for sales tax on LVG?
RS needs to submit a return for sales tax on LVG every three (3) months according to the taxable period by filing in the LVG-02 form via https://lvg.customs.gov.my.
Which currency should be used when submitting the return and payment?
Ringgit Malaysia (RM).
What is the source reference for currency exchange?
RS may use one (1) of the following suggested prevailing acceptable exchange rates and shall use it consistently:
- Bank Negara Malaysia (BNM) - https://www.bnm.gov.my/exchange-rates
- Exchange rates published by local banks
- Exchange rates published by reputable news agencies - https://www.reuters.com/markets/currencies/
Yes. RS is allowed to issue credit note or debit note under the following situations:
- Any changes on sales tax rate on LVG in force under section 10 of the Sales Tax Act 2018; or
- Financial Adjustments made in the course of a business transaction.
Only RS living abroad is allowed to keep documents or records related to sales tax on LVG outside Malaysia as long as the records are accessible.
RS is responsible for keeping records related to LVG transactions for seven (7) years from the last date related to those records.
CUSTOMS CLEARANCE PROCEDURES ON THE IMPORTATION OF LVG
Does the LVG imported to Malaysia still need to comply with the existing import procedure?
Yes, LVG imported into Malaysia is still subject to the existing import procedures as it remains unchanged. Prohibited goods may require permits/approvals from relevant agencies prior to the goods arrival. Goods may also be screened, inspected, or examined prior to their release.
Is the de minimis facility that currently exempts Import Duty and Sales Tax on Imports for goods at a CIF (Cost + Insurance + Freight) value not exceeding RM500 consignment sent to Malaysia using air courier services still applicable?
The de minimis facility under Item 94, Part I of the Schedule, Customs Duties (Exemption) Order 2017 and Item 24, Schedule A, Sales Tax (Persons Exempted from Payment of Tax) Order 2018 is still applicable.
What are the addtional customs requirements for LVG importation?
During the importation of LVG, the LVG Registration Number information must be provided by the importer/customs agent in the import declaration (e.g., Customs Form No.1 (K1), electronic pre-alert system (e-PAM) or consignment note (CN22/CN23). Any supporting documents must also be provided upon request by the proper officer of customs.
Asma brought LVG valued at RM300 from a Registered Seller (RS) outside Malaysia and has been charged Sales Tax on LVG. The goods do not fall under the prohibited category and will be shipped to Malaysia by air using a courier service. Will there be any addtional duties/taxes charged upon importation?
No additional duties or taxes will be charged upon importation as the goods imported are entitled to de minimis.
What are the consequences if the RS/exporters/customs agent fail to provide the LVG Registration Number for imported LVG?
Goods declared without any LVG Registration Number information will be charged Sales Tax on Imports (if applicable) during importation.
Zaris bought two (2) sets of the same kitchenware items for RM300 each and a plastic box for RM50 from RS. These goods will be shipped in the same consignment package to Malaysia using air courier service. How does the LVG treatment work under this scenario?
This consignment exceeds the de minimis value (CIF RM500). Therefore, this consignment will be subjected to Import Duties and Sales Tax on Imports (if applicable). However, since Sales Tax on LVG has been charged by the RS at the point of sale on both line items, Sales Tax on Imports will not be charged upon importation. Only Import Duties will be charged upon importation on both line items.
Please do not hesitate to contact us for more information:
Ten Jia Sheng
014-911 1880
jsten@jsc-corp.com
27 Dec 2023
