On January 1, 2024, the government required a 10% sales tax on low-value imports. The rule applies when the total price of imported items is MYR 500 or less. This change follows the earlier 2023 rollout under the Sales Tax Act 2018.
The Royal Malaysian Customs Department now oversees collection. Overseas vendors and local importers must register and collect the sales tax for cross-border deliveries by land, sea, or air.
This update shifts how small parcels and e-commerce shipments are handled. Businesses should update billing and reporting systems, verify import declarations, and review the period for compliance to avoid penalties.
Key Takeaways
- Since Jan 1, 2024, a 10% sales tax applies to low-value imports ≤ MYR 500.
- The Royal Malaysian Customs Department enforces rules from the Sales Tax Act 2018.
- Overseas sellers and importers must register to collect and remit the tax.
- Update systems and declare imports properly to stay compliant.
- Review the new framework now to avoid fines during the transition period.
Understanding the Low Value Goods Tax Malaysia: What Online Sellers and Importers Should Know
Understanding the new framework helps businesses adapt quickly to the 10% sales levy on small imports.
The legal basis rests on three pillars: the Customs Act 1967, the Excise Act 1976, and the updated Sales Tax Act 2018. These laws define how the sales tax applies to cross-border parcels and customs procedures.
Most physical items sold via web platforms and valued at or under MYR 500 now attract a 10% sales tax. The Royal Malaysian Customs Department issues guidance for registration, collection, and reporting.
Importers must confirm accurate import declaration details to avoid delays at the border. Exemptions exist for certain categories like tobacco and alcohol, so check the act before adjustment.
| Topic | Action | Who |
|---|---|---|
| Legal foundation | Review Acts and updates | All businesses |
| Sales tax rate | Add 10% at checkout | Overseas vendors |
| Customs process | Ensure correct declarations | Importers & couriers |
The government allowed a transition period to let business systems update. Stay compliant with the tax act 2018 to avoid penalties and keep cross-border sales flowing.
Defining Low Value Goods and Taxable Scope
Goods sold at or below MYR 500 are categorized as LVG and face a 10% sales charge at point of sale. This threshold excludes excisable items such as cigarettes, tobacco products, and intoxicating liquors.
Exclusions from Taxable Goods
The Royal Malaysian Customs Department explicitly removes excisable products from LVG coverage. That means tobacco and alcoholic items are handled under separate duties and rules.
Determining Sale Value
The 10% sales tax lvg applies to the sale value only. Do not include shipping, insurance, or handling fees when you calculate the base.
- Use the CIF value accurately so businesses do not overpay or underpay.
- Configure point sale systems to show the cost of items separate from delivery charges.
- Refer to the Sales Tax Act 2018 for legal scope and follow guidance from the malaysian customs department for import declaration steps.
Determining Your Liability for Tax Registration
If your annual sales of low value goods pass the MYR 500,000 mark within any 12-month period, you must register with the Royal Malaysian Customs Department. Registration starts the moment the threshold is met.
Track total sales closely so you know the exact time you become liable. The Sales Tax Act 2018 allows businesses to use either the historical method or the future method to calculate when to register. Apply the method that best matches your accounting practice.
Once registered, you will receive an lvg registration number. That number lets you legally collect the 10% sales tax lvg at point of sale. Keep accurate records and submit details to the customs department to receive a valid registration.
- Monitor rolling 12-month sales totals.
- Choose historical or future method per the act.
- Submit registration to get your lvg registration number.
| Threshold | Required action | Responsible party |
|---|---|---|
| MYR 500,000 (12 months) | Register and obtain lvg registration number | Registered seller / business |
| After threshold met | Collect 10% sales tax lvg at point of sale | Registered seller |
| Non-compliance | Penalties and back payments | Malaysian Customs Department |
Navigating the Registration Process for Overseas Sellers
Overseas businesses must use the MyLVG portal to submit a formal registration before selling into the Malaysian market. Apply via the MyLVG system at https://mylvg.customs.gov.my/ and prepare required documents in advance.
Required Documentation for Application
Complete the LVG-01 form on the MyLVG portal. Provide your business registration number, official correspondence address, and contact details.
The Royal Malaysian Customs Department asks for details of company directors or authorized persons. Include scanned identity documents and proof of business registration.
“Accurate reporting of total sale value is essential to secure a valid lvg registration number and avoid delays.”
- Ensure all company details match official records.
- Report total sale value per the Sales Tax Act 2018 during application.
- Keep records updated for the registration period to remain compliant.
| Step | Required Item | Who provides |
|---|---|---|
| Portal submission | LVG-01 form via MyLVG | Overseas business |
| Business details | Registration number, address, contact | Applicant |
| Authorized persons | Director info and IDs | Company |
| Approval | lvg registration number | Malaysian Customs Department |
Once approved, use the lvg registration number on future filings and at point of sale. Follow the Sales Tax Act 2018 and update details promptly if anything changes.
Calculating Sales Tax on Imported Items
Apply the 10% sales tax to the unit price for every applicable sale at point of purchase.
Registered sellers must show the charge clearly at checkout and collect it from the buyer. Do not add shipping, insurance, or handling when you compute the base sale amount.
The Sales Tax Act 2018 requires the tax to be on the actual sale value of items. Confirm the CIF value when necessary so the sales tax lvg calculation stays accurate.
Keep your lvg registration number on invoices and customs documents for every shipment. The Royal Malaysian Customs Department will use these records during audits.
- Calculate 10% on the unit price of items only.
- Collect the amount at the point sale and display it clearly.
- Verify CIF value and keep registration details for the customs department.
Accurate calculation and record keeping help your business remain compliant and simplify reporting under the act 2018.
Managing Customs Clearance and Import Declarations
Submitting complete import paperwork makes it easier for authorities to verify that the 10% sales charge was collected. Accurate records speed processing and reduce the risk of extra duties or holds.
Information Requirements on Packages
Include the lvg registration number on every consignment note or Customs Form 1. This helps the Royal Malaysian Customs confirm that the charge was applied at point of sale.
Record the CIF value clearly so the customs department can check compliance with the tax act. A correct declaration prevents duplicate charges at the border.
Handling Land and Sea Freight
For shipments via land or sea, the registered seller must supply full documents to the clearing agent. Include invoices, the lvg registration number, and any proof of collection to avoid import duties sales being reassessed.
Postal Service Procedures
Postal consignments require an accurate import declaration to pass quickly through the Malaysian Customs Department. When the paperwork shows the charge and seller details, the office can clear goods without delays.
- Always show registration on paperwork.
- Verify import declaration status to avoid double charges.
- Keep copies of invoices and consignment notes for the period required by law.
Leveraging De Minimis Exemptions for Air Courier Shipments
Using the de minimis route for air courier items can cut import costs when paperwork proves the sales levy was collected.
The de minimis facility lets goods via air courier with a CIF value up to MYR 500 be exempt from import duties. This relief applies only when the sales tax lvg has already been charged at the point of sale.
Note exclusions: tobacco products and other restricted items never qualify for this treatment, even if the CIF value is within the threshold.
- Ensure the lvg registration number is visible on the consignment note so customs can verify eligibility.
- Mark the import declaration clearly with the tax lvg status for quick processing by the Royal Malaysian Customs Department.
- Collect the 10% sales tax lvg at sale; exemptions depend on that collection being documented.
Proper records and clear consignment details reduce import duties sales and speed clearance. Keep invoices, consignment notes, and registration details ready for customs checks to secure the exemption period benefits.
Implementing Digital Reporting and E-Invoicing Requirements
Phase 4 rollout expands mandatory e-invoicing to firms with RM 1–5 million turnover from January 1, 2026. This step makes digital reporting central to compliance for sales records and customs checks.
The Royal Malaysian Customs Department and LHDN now require e-invoices to improve transparency. Registered sellers must include their lvg registration number in each digital file so the sales tax lvg is attributed correctly.
The Role of Self-Billed E-Invoices
When a local firm pays a foreign supplier, it must issue a self-billed e-invoice to claim legitimate deductions. These documents support audit trails and help match import declaration entries to reported sales.
- Ensure MyInvois compatibility for seamless reporting.
- Sync import declaration data with digital records for full transparency.
- Reflect consignment note details even for parcels arriving via air to avoid discrepancies.
| Requirement | Who | Benefit |
|---|---|---|
| Self-billed e-invoice | Registered seller | Claim expenses, clear audit trail |
| Include lvg registration number | All registered entities | Correct sales tax lvg attribution |
| Sync import declaration | Customs & finance teams | Faster clearance, fewer disputes |
Transition period gives firms time to adjust systems. Automating reporting reduces manual errors and speeds compliance with the new digital period for sales and customs record-keeping.
Optimizing Payment Gateways for Tax Compliance
Integrating a payments platform that captures mandatory tax metadata removes manual steps and cuts errors at checkout.
Razorpay Curlec is built to record required fields during the point sale. This ensures the 10% sales tax is calculated and collected automatically. It also helps with SST-02 filings and e-invoicing.
Make sure your lvg registration number is entered in the gateway settings. That links payment records to your registration and speeds customs checks for air courier parcels.
- Automates collection of sales tax and records sale details.
- Simplifies quarterly reporting to customs and finance teams.
- Reduces cart abandonment by keeping checkout fast and clear.
| Feature | Benefit | Action |
|---|---|---|
| Tax metadata capture | Accurate filings | Enable in gateway |
| Registration integration | Faster customs clearance | Store lvg registration number |
| Air courier support | Smoother imports | Map consignment fields |
Utilizing Trade Agreements to Reduce Tax Liability
Companies that claim preferential rules of origin may reduce or eliminate import duties for qualifying shipments from partner nations such as RCEP or CPTPP members.
Use free trade pacts to obtain 0% tariffs on eligible products. This lowers landed costs and helps pricing remain competitive.
Firms with operations in Licensed Manufacturing Warehouses or Free Industrial Zones can often defer or exempt certain duties on raw materials. That relief supports cash flow and production planning.
Even for parcels arriving by air courier, check if your shipment meets agreement rules. The correct certificates and stamps are needed to claim preferential rates.
Document everything. Accurate origin paperwork, invoices, and certificates let customs verify claims quickly. Good records cut clearance delays and disputed charges.
| Mechanism | Benefit | Required proof |
|---|---|---|
| FTA preferential rate | Lower or zero import duties | Certificate of origin |
| Free zone deferral | Postpone or exempt duties on inputs | Zone permit and invoices |
| Air courier checks | Faster clearance if proven | Signed origin docs on consignment |
Plan shipments with rules of origin in mind to reduce total cost for value goods and maintain compliance with customs requirements.
Conclusion
strong, This policy shift aims to balance revenue goals with smoother cross-border trade for small parcels. It supports local firms while modernizing collection and reporting.
Overseas vendors and marketplaces must register if they meet the annual threshold. Accurate e-invoicing and timely digital reports help avoid penalties and speed customs clearance.
Use modern payment gateways and leverage trade agreements to manage liability and keep checkout friction low. The transition period gave time to adapt systems for long-term success.
Understanding rules for value goods is essential for staying compliant and keeping customers satisfied in the Malaysian market.
FAQ
What is the LVG registration number and who needs it?
The LVG registration number is issued by the Royal Malaysian Customs Department to overseas sellers, marketplaces, and importers who must collect sales tax at import for low-value consignments. If you ship goods via air courier, post, or express carriers into Malaysia and the consignments are subject to sales tax, you must register and provide this number on import documentation.
How do customs and sales tax interact at the point of import?
Customs calculates sales tax based on the CIF value (cost, insurance, freight) declared for the consignment. Royal Malaysian Customs enforces collection at the point of clearance. Import duties and other levies may also apply depending on tariff classification; sales tax is separate and collected under the Sales Tax Act 2018.
Which items are excluded from the taxable scope?
Exemptions include certain medical supplies, food items subject to specific codes, and goods covered by effective free trade agreements. Controlled items like tobacco and alcohol attract different excise or customs treatment rather than the standard sales tax for low-value consignments.
How is the taxable sale value determined for LVG shipments?
Taxable value is generally the CIF value declared on the import declaration. If the declared value seems undervalued, customs may adjust it using transaction evidence. Market value and invoice records help determine accurate assessment for sales tax purposes.
Are marketplaces responsible for registration and reporting?
Marketplaces that facilitate sales into Malaysia can be treated as the registered entity for collecting and remitting sales tax. They must maintain an LVG registration number, report transactions per the prescribed period, and ensure proper documentation for each consignment.
What documentation is required when registering as an overseas seller?
Required documents typically include company registration certificates, proof of business address, bank details, a responsible person’s ID, and sample invoices. The Royal Malaysian Customs Department will list specific items needed to process the LVG registration application.
How often must registered sellers report and remit collected tax?
Reporting periods are set by customs—usually monthly or quarterly depending on the account type. Registered entities must submit returns and pay collected sales tax within the statutory timelines to avoid penalties.
What information must appear on the consignment note and package labels?
Consignment notes and package labels should include the LVG registration number (if applicable), accurate description of goods, quantity, invoice value, HS tariff code, seller contact, and consignee details. Clear documentation speeds customs clearance and reduces the risk of assessment delays.
How are land and sea freight shipments handled versus air courier?
Land and sea imports follow standard import declaration procedures and may face different thresholds for minimal value handling. Air courier and postal shipments often use simplified clearance but still require proper import declaration and LVG compliance when taxable.
What are de minimis exemptions for air courier shipments?
De minimis exemptions exempt very low-value consignments from sales tax or duties up to a set monetary threshold. For shipments above that threshold, sales tax applies. The exact CIF threshold and rules depend on current customs policies and any temporary measures.
How should businesses handle postal service procedures and customs clearance?
Use accurate electronic import declarations and ensure postage providers include required invoice information. Work with postal operators or courier partners experienced with Malaysian customs to submit the LVG registration number and supporting documents to avoid delays.
What is the role of self-billed e-invoices in LVG compliance?
Self-billed e-invoices allow marketplaces or buyers to issue invoices on behalf of sellers. They streamline reporting and align with electronic reporting requirements. These invoices must contain required tax fields, the LVG registration number, and accurate transaction details for audit trails.
Do digital reporting and e-invoicing affect audit exposure?
Yes. Digital records and e-invoices create clearer trails for customs and the Royal Malaysian Customs Department. Maintaining compliant electronic records reduces discrepancies during audits and supports timely reconciliation of collected sales tax.
How can payment gateways be optimized for sales tax compliance?
Configure gateways to collect required tax fields at checkout, store seller and buyer VAT/LVG numbers, and produce transaction logs compatible with customs reporting. Integrations with accounting or e-invoicing systems reduce manual errors and speed remittance.
Can trade agreements reduce sales tax or import duties for LVG shipments?
Preferential trade agreements can lower or remove customs duties for qualifying goods, but they usually do not exempt sales tax applied under domestic law. Proper origin documentation may reduce duty liability but sellers should verify whether sales tax still applies at import.
How are tobacco and excisable items treated under the LVG framework?
Tobacco, alcohol, and other excisable goods follow separate regulatory controls and attract excise duties in addition to customs and possible sales tax. Clearance for these items often requires specific permits and stricter documentation with the Malaysian authorities.
What penalties apply for non-compliance with LVG rules?
Penalties include fines, late payment interest, seizure of goods, and potential registration suspension. Accurate declarations, timely remittance, and keeping required records minimize the risk of enforcement action by the Royal Malaysian Customs Department.
Where can sellers get official guidance and updates?
Visit the Royal Malaysian Customs Department website and consult the Sales Tax Act 2018 and related regulations. For complex cases, engage a customs broker, tax advisor, or legal counsel experienced in Malaysian import and sales tax matters.
