PETALING JAYA: The introduction of the sales tax on low-value goods (LVGs) imported into Malaysia would help level the playing field between local and overseas sellers, say tax experts.
They said such a move would not contribute much to inflation or raise the prices of products as it only affects imported goods.
Tax expert Datuk Koong Lin Loong said a sales tax is commonly imposed on imported and locally-manufactured goods, except for some exempted products.
“Online selling and buying became popular (since) the pandemic. People prefer to buy online because they are not charged a sales tax, unlike when they purchase (physically) from a shop.
“This is when the unfairness occurred, especially to local small traders, as people tend to shop more online,” he said.
Koong, who is the Associated Chinese Chambers of Commerce and Industry of Malaysia’s treasurer-general, said the various ecommerce platforms would need to facilitate the charging of the LVG sales tax.
“We cannot have all sellers in the world register with the Customs Department for tax purposes. These ecommerce platforms are the intermediary, also distributor and importer between buyers and many sellers out there, be they local or overseas,” he said.
Koong said that when consumers buy imported goods from a select ecommerce platform, they pay the tax when making their payment.
“When the product arrives in Malaysia, it will have a chit or receipt attached, with the sellers’ information showing that sales tax had been paid. But when no such proof is found on the product, the buyer may need to have it sorted out and pay the relevant sales tax,” he added.
Koong pointed out that LVG sales tax occurs at the point of importation and there should be no concerns over double taxation.
“When taxes are imposed on LVGs during importation, sellers cannot apply the same tax when they sell them on their ecommerce platform later.
“They may adjust their profit margin but not charge another sales tax,” he said.
However, Koong said the Customs Department may want to provide more details about direct online purchases from overseas sellers who are not registered with the department.
“When someone here buys directly from an overseas seller, who then couriers the goods over – will it attract any sales tax?”
Similarly, he also highlighted the need for more details for goods that are purchased using consolidated shipping or forwarding services in Malaysia.
Koong said the LVGs sales tax would help local sellers be more competitive.
“With this tax, buyers will pay similar prices for the same product.
“This means a local seller can still have a decent margin of profit without having to worry about the low prices of online sellers,” he said.
He also said the tax is not likely to contribute to inflation or drive up the prices of products as it’s only imposed on imported products.
Another tax expert Christine Koh said it is not appropriate to say that the LVGs sales tax is to deter consumers from buying imported goods online.
“It is to create a level playing field for local sellers,” she said.
Koh, the managing director of a public accounting firm, said the onus is on sellers to have the awareness and initiative to register with the Customs Department to impose such a tax when their annual sales turnover reaches the RM500,000 threshold.
She also agreed more clarity was needed for online overseas purchases through consolidated shipping and forwarding services.
Koh said many forwarding companies offer such services, as not all foreign sellers overseas do international shipping.
For example, she said Taobao offers its consolidated shipping services, while also allowing buyers to engage their preferred forwarding agents.
“The forwarding agents usually provide buyers with a local address of where the product is shipped from.
“When all the products the buyer purchases have arrived at the address, then the agent will consolidate them and ship them in one consignment to the buyer in Malaysia,” she said.
