Sales tax may spark in-person shopping


KUCHING: A sales tax on online purchased low-value goods (LVG) will create a fairer playing field for local and imported items which in turn may encourage consumers to return to traditional in-person shopping.

Honorary Professor Madeline Berma pointed out that the sales tax will ensure equal tax treatment for locally manufactured and imported goods.

Currently, she said local manufacturers are taxed between five per cent and 10 per cent sales tax while foreign sellers are exempted.

“The new low value (LVG) is targeted to impose a flat rate of 10 per cent on both local and foreign sellers who sell LVG on the online marketplace or operate an online marketplace.

“If goods purchased over the Internet are taxed, this will raise the prices of the goods to the consumer.

“The increase in overall prices on goods caused by the introduction of the sales tax will spur additional competition between virtual (online) and brick-and-mortar (physical) shops,” she told New Sarawak Tribune recently.

With the increase in overall prices of LVG, the academic from Universiti Malaysia Sarawak (UNIMAS) said it also may discourage online shopping especially among small-scale consumers and sellers.

Reacting to the new tax measure, she said the nation’s tax revenue will increase as the government anticipates collecting RM200 million per year from the implementation of this levy.

However, she said it is still unclear how the government will impose laws on the Internet.

“Imposing regulations on online retail might be excessively difficult right now especially, given that Internet businesses at times appear to operate out of ambiguous locations.

“Also this tax will discourage sellers and consumers (small ones) to do online business and lead to a shift back to physical shopping,” she added.

The government will begin imposing a flat rate of 10 per cent tax on imported (LVG) that are purchased online, starting from 2023.

Imported LVG are defined as imported goods with a total value of less than RM500 per consignment.

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