KUALA LUMPUR (Jan 28): Malaysia's 10% sales tax on low-value goods (LVG) has collected a total of RM1.29 billion in revenue since its implementation two years ago.

In a written parliamentary reply on Wednesday, the Ministry of Finance (MOF) said it collected RM476 million from the tax in 2024. Collections then increased to RM817 million in 2025.

The ministry said the increase in collections reflects increasingly stable compliance among overseas sellers that supply goods directly to Malaysian consumers through online platforms.

It was responding to a query from Tan Kar Hing (Pakatan Harapan-Gopeng), who sought details on the LVG revenue generated since 2024, and asked if the tax had successfully reduced imports of low-priced foreign goods for the benefit of local small and medium enterprises (SMEs).

First announced in Budget 2022, the LVG tax was implemented on Jan 1, 2024. It applies to all goods sold online and priced at RM500 per item or less. The tax covers items brought into Malaysia by land, sea or air — except cigarettes, e-cigarettes, vaping products, smoking pipes, tobacco products, and liquor.

According to the MOF, the LVG tax was introduced to broaden the tax base fairly and address tax imbalances in cross-border digital trade, adding the approach is aligned with international practices adopted by many countries.

The ministry stressed that the LVG tax is not intended to restrict or reduce the inflow of low-priced imported goods. Instead, it aims to close a "tax gap", as imported LVG were previously exempt from sales tax while local traders were required to charge sales tax on domestic sales, putting home-grown businesses at a disadvantage.

The ministry noted that the policy has had a positive impact on local SMEs by narrowing price disparities arising from the unequal tax treatment.

This shift supports a more balanced market environment and encourages local SMEs to compete based on quality, value and service, rather than price alone, the ministry added.

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