THE government must defer the 10% tax on low-value goods (LVG) sold online until the recession is over, said Lim Guan Eng. 

“While there is a need to create a level playing field by imposing the same tax on foreign suppliers imposed on local suppliers, the government should have waived (the tax) as it will only impact the lower-income groups,” said the DAP chairman in a statement today.

The Sales Tax (Amendment) Bill 2022 was recently passed to impose a 10% sales tax by January 1 on goods priced below RM500 purchased online from foreign sellers.

The government expects to earn RM200 million from the tax.

Currently, low-value goods priced RM500 and below are not subject to an import tax.

“This, however, has caused unfair treatment for local traders as locally produced LVG below RM500 are subject to a sales tax as well as abused by dishonest foreign suppliers… to avoid being taxed.

This means the RM200 million in tax revenue for the government will be at the expense of   the low-income group, said Lim. 

“The government should be reducing their tax burden instead of increasing it during times of imminent recession and soaring prices.

“Whilst it is the government’s intention to create a level-playing field for domestic online suppliers… a judicious approach would be to waive the sales tax for all LVG for both foreign and domestic suppliers until the coming recession is over.”

“The threat of a global recession is real as can be seen from the performance of the US economy which is currently in technical recession over the first two quarters of 2022 and the Bank of England’s prediction the United Kingdom will be in recession in the final quarter of 2022.

“There is no doubt that additional taxes will not help to generate economic growth to overcome the expected recession.” – August 12, 2022.