LVG Tax Malaysia 2024: Regulations, Registration & Payment Process

Malaysia will apply a 10% sales tax to low-value goods (LVG) sold online as of January 1, 2024. The RMCD has announced the implementation of this tax, which was first mentioned during the tabling of Budget 2022.

LVG Tax Malaysia 2024

The LVG tax is a sales tax imposed on low-value goods (LVG) sold online and brought into Malaysia by land, sea, or air. 

The tax rate for LVG in Malaysia is 10%. LVG refers to all goods sold at a price not exceeding RM500, excluding certain specified items such as cigarettes, tobacco products, intoxicating liquors, electronic cigarettes, and preparation of a kind used for smoking. 

The LVG tax legislation came into force on January 1, 2023, but the actual implementation was postponed several times before being confirmed to start on January 1, 2024. Registered sellers are required to charge, collect, and remit sales tax on LVG.

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Eligibility for LVG Tax 2024  Registration

The LVG tax applies to both sellers and online marketplace platforms that meet certain eligibility criteria. Here’s a breakdown of who needs to register for LVG tax in Malaysia in 2024:

Sellers:

• Local and overseas sellers who directly sell LVG to Malaysian consumers and whose total LVG sales in a 12-month period exceed RM500,000 are liable to register as “Registered Sellers” (RS) with the Royal Malaysian Customs Department (RMCD).
• This threshold is calculated based on a rolling 12-month period, meaning it’s constantly being updated as new sales figures are added.
• If a seller anticipates exceeding the RM500,000 threshold within the year,they should proactively register before that happens.

Online Marketplace Platforms:

• Any local or overseas online platform that facilitates the sale of LVG to Malaysian consumers is required to register as an RS regardless of their own geographical location or the location of their sellers.
• This includes platforms like marketplaces, shopping websites, and social media platforms with dedicated e-commerce functionalities.

How is the sales tax on LVG calculated in malaysia?

The sales tax on LVG in Malaysia is calculated based on the sale value of the goods, excluding certain charges.

• Sales Value: The sales tax is charged on the sale value of LVG, which does not include any tax, duty, fee, or other charges such as transportation, insurance, or other costs.
• Tax Rate: The sales tax rate on LVG is a flat 10%.
• Registration: Local and foreign sellers who sell a total of RM 500,000 in LVG over a 12-month period must register with the Royal Malaysian Customs Department (RMCD).
• Sales Tax Calculation: The sale value used in the sales tax calculation must exclude any tax, fee, or other charges imposed on the imported LVG.
• Sales Tax Due: Sales tax on LVG is due when the LVG is sold by the seller.
• Taxable Period and Furnishing of Return: The taxable period for a registered LVG seller is 3 months, and the returns must be furnished to Customs control.

The sales tax legislation on LVG came into force from January 1, 2023, but the imposition of sales tax on LVG will only start on January 1, 2024.

What is the process for paying the sales tax on LVG in malaysia?

The process for paying the sales tax on LVG in Malaysia involves several steps, which are outlined below:

• Registration: Local and foreign sellers with a total LVG sale value of RM 500,000 over a 12-month period must register with the Royal Malaysian Customs Department (RMCD) using the LVG-01 form via MyLVG,
• Charging and Collection: Registered sellers are responsible for charging, collecting, and remitting sales tax on LVG. The sales tax is charged on the sale value of LVG, excluding transportation and insurance costs.
• Display of Information on Package: Every registered seller is required to furnish a consignment note with the required information, which must be patched or affixed on the LVG package.
• Invoicing: The invoice or document in relation to the sale of the LVG must state the sale value, tax amount, and other relevant details.
• Payment: Sales tax on LVG is due when the LVG is sold by the seller. The taxable period for a registered LVG seller is 3 months, and the returns must be furnished to Customs control.
• Enforcement: Customs can withhold the LVG if it appears that sales tax has not been charged, and the LVG can only be released after the correct amount of sales tax on the LVG has been paid.

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