PETALING JAYA: Those who sell low-value goods (LVG) and source their products locally are set to see a boom in business come Jan 1, thanks to the imposition of sales tax on imported items below RM500.
Economists say the tax will create a level playing field for local retailers and suppliers, who are now forced to compete with foreign online sellers.
The announcement that the tax would be implemented was made by Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz on Oct 29 last year.
Sunway University Business School economics professor Dr Yeah Kim Leng said local sellers who pay sales tax are currently at a disadvantage compared with foreign sellers, as their products cost more.
He said consumers who are not price sensitive would continue to buy from foreign online sellers on account of product design, quality and availability.
“There is a proliferation of home-based individual sellers capitalising on the e-commerce and online shopping boom.
“These sellers will be key beneficiaries of the tax imposed on imported LVG.
“However, if local sellers import LVG for resale in the local market, they will likely pass on the tax to buyers. Nevertheless, whether it is imposed on local importers or foreign sellers, the LVG tax will enhance government revenue,” he said.
eBusiness Association of Malaysia president Mickie Teo said the 10% tax on imported goods was not new, and has existed for a long time for goods above RM500.
Now, the government wants to tighten matters and impose a tax on LVG as well. Every single parcel will be checked for its declared value.
“For entrepreneurs, the value of the imported goods is normally above RM500 per order. So, the 10% tax on LVG below RM500 would not have much of an impact,” Teo said.
“The government’s objective to balance the disadvantages faced by local manufacturers is to be lauded. This will ensure a fairer market and competition between local and foreign sellers.
“If every online order from abroad is valued between RM50 and RM500 and is subject to 10% sales tax, that means the government will collect between RM5 and RM30 in tax per parcel.”
Teo added that it was important for the government to have a long-term plan when taxing LVG, so the additional revenue that is earned can be utilised to help and grow local online players.
“For instance, we welcome any online incentives such as upgrade of our internet packages, and training for local sellers and manufacturers on online business potential and new markets.
“Based on the current economic situation, we hope the government will consider waiving the tax for certain imported goods, especially food and other essentials,” he said.
Small and Medium Enterprises Association secretary-general Yeoh Seng Hooi said the sales tax on LVG is a question of fairness, adding that local small and medium enterprise producers should not be disadvantaged by any exemptions given for imported products.
“This will level the playing field for Malaysian products. Singapore has also announced a similar tax on LVG to take effect from January 2023,” Yeoh added.
