KUALA LUMPUR, Aug 4 — The Dewan Rakyat has passed the Sales Tax (Amendment) Bill 2022 imposing a 10 per cent tax on imported low-value goods (LVGs) which are sold by foreign sellers.
The tax rate for LVG, which are goods priced below RM500, is expected to be implemented next year.
The Bill was passed via a voice vote, after heated debates, notably by former finance minister Lim Guan Eng, as well as Jelutong MP RSN Rayer.
Both had expressed concerns that the amendment would hurt local, small-time business owners and consumers who are already burdened by the high costs currently, owing to inflation.
In his winding-up speech, Deputy Finance Minister I Datuk Mohd Shahar Abdullah said that the government expects to collect RM200 million with the imposition of the 10 per cent tax, and that the amendment is needed to level the playing field between foreign and local sellers.
“So that we can equalise, and I agree that we should equalise the competitiveness between local and foreign traders. But I hope we do not equalise by imposing an additional burden on users, because in the end, it is the users who have to pay more.
“And we also want to encourage e-commerce, but when goods priced less than RM500 are taxed, isn’t the more reasonable, sane, practical step, to exempt the 10 per cent sales tax payment for local traders?” Lim asked.
He added that the Opposition does not intend to politicise the matter, but rather help the government to see the adverse effects of the amendment.
The new tax measure was announced by Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz during the tabling of Budget 2022.
“YB if you go back to the villages and explain to the voters, tell them that even RM500 de minimis is taxed, is this government that stingy? Even the little ones (businesses) are not spared. I think that is something that is not the aim. The intention is to tax those who can afford it, not those who can’t afford it. This is perverse.
“So here I hope, in this matter, you can give an explanation. Like I said, it is unreasonable, if you want to equalise; we will equalise with the exception of local traders,” he said, adding that the impact on consumers and small traders will be huge should local businesses be spared from the taxation.
De minimis refers to the value of something that is so small that it is unreasonable to account for it.
In his explanation, Shahar justified the move, saying that the measure is also meant to prevent any form of exploitation from the void of sales tax on imported LVGs.
He said that the import duty, however, is still exempted for goods which are below RM500.
“Just that YB, the most important thing you need to remember is that our intention is to provide protection for local business owners, and we want to strengthen the domestic market. We are only able to collect RM200 million, expected to collect RM200 million for one year, which is our expectation.
“We want to give sustainability and empowerment to the local economy. When we empower the local market, local business owners, surely our money does not flow out. When our money does not flow out, the strength of our national financial position becomes stronger. That’s one of the objectives,” he added.
Shahar added that in 2020, there were 1,922 tax-related offences, which he said despite being seemingly small, had burdened the management of the ports.