On January 1, 2024, Malaysia officially implemented the sales tax on low-value goods (LVG tax), a measure initially proposed in Budget 2022. While it was originally scheduled to take effect on April 1, 2023, the implementation was postponed until further notice.

Local and foreign online sellers whose total sales value of LVG imported into Malaysia exceeds RM500,000 within a 12-month period may opt to register under the Sales Tax Act (Amendments) 2022. Registration is available through the portal mylvg.customs.gov.my.

The Customs Department defines LVG as all goods priced at RM500 or below, excluding cigarettes, tobacco products, intoxicating liquors, electronic cigarettes, and smoking-related preparations. These goods are imported into Malaysia via land, sea, or air.

The LVG tax is imposed at a rate of 10%.

In summary, the LVG tax introduces both opportunities and challenges. While it will increase the prices of imported goods—impacting lower-income consumers (B40) for items under RM500—it serves a vital role in protecting local sellers from unfair price competition. Without this tax, local businesses subjected to SST would face significant challenges competing with foreign sellers offering lower-priced goods.