KUALA LUMPUR (Dec 18): The Small & Medium Enterprises Association (Samenta) Malaysia said it fully supports the implementation of the low value goods (LVG) tax with effect from Jan 1, 2024.

In a statement on Monday, the association said it had been among the early proponents of this equalising tax and is grateful that the government is taking resolute steps to implement LVG, despite the strong lobby from online marketplaces.

Samenta national president Datuk William Ng said that for many years, local retailers and online sellers, especially SMEs, were fighting an unfair competition against foreign sellers.

“While local retailers have to pay tax at various points of the supply chain, including when bringing in components or raw materials as well as finished goods into Malaysia, we are being undercut by foreign sellers and local dropshippers who have largely escaped from paying tax to Malaysia on their products.

“This artificially distorts pricing in favour of these foreign sellers,” he said.

Ng said that additionally, directly delivered foreign products may not have undergone the same stringent quality and safety tests for electrical goods, foodstuff and pharmaceutical products that Malaysian manufacturers and importers are subject to.

He said this could pose fire, safety and health risks to Malaysian consumers.

“The LVG tax is good news for our local retailers, and will help narrow the inequality and allow local sellers, including SMEs, to compete on the basis of superior service, proximity, and better local consumer protection.

“The mandatory registration as well as 10% tax on LVG will also drive additional revenue to Malaysia and support the ringgit, while promoting domestic e-commerce,” he said.