PUTRAJAYA should exempt double-taxing businesses selling low-value goods (LVGs) below RM500 to rake in extra revenue, Lim Guan Eng said. 

With Malaysia agreeing in principle to implement the global minimum tax of 15% on certain multinational companies (MNCs) starting January next year, the DAP chairman said that Malaysians should not be burdened with more forms of taxes. 

“Under the Inland Revenue Board (IRB) multinational tax branch, there are close to 3,000 MNCs, which would mean hundreds of millions of extra revenue when the 15% tax rate is implemented on January 1, 2023. 

“With the extra revenue, there is no need to impose the 10% tax on all online sales for LVGs below RM500 next year,” the former finance minister said. 

Earlier this month, Dewan Rakyat passed the Sales Tax (Amendment) Bill 2022, which seeks to impose a flat 10% sales tax on goods purchased online and delivered to Malaysia by vendors registered with the Finance Ministry.

This flat rate will be imposed on LVGs sold online priced below RM500 and will come into effect next January.

Tabling the bill, Deputy Finance Minister Mohd Shahar Abdullah said the government was expected to collect RM200 million a year from the implementation of this tax.

Meanwhile, the IRB also said that the tax rate of 15% would reallocate profits of more than USS$125 billion (about RM556.62 billion) from about 100 of the world’s largest and most profitable MNCs to all countries.

Lim said that DAP had proposed the 10% tax on online purchases of LVGs below RM500 from local suppliers be waived, instead of imposing the tax on foreign suppliers.

This is so local suppliers can enjoy the same benefits as foreign suppliers, he said.

He further said that such a waiver of 10% sales tax on LVGs below RM500 would also help to reduce the financial burden of low-income groups who normally buy the LVGs online.

“In other words, the additional RM200 million in revenue for online LVG foreign purchases, and unspecified hundreds of millions of ringgit more collected from online LVG domestic purchases, will be borne by the low-income groups,” the Bagan MP said. 

“Malaysians do not need new taxes nor any increases in interest rate when pressing economic issues resulting in high cost of living, ranging from soaring prices of food and materials, a severe labour shortage and a rapidly depreciating ringgit remain unresolved.

“The government’s thirst for extra revenue can be met with the 15% global tax proposed on MNCs, which would be more than sufficient to replace the 10% online sales tax on all LVGs below RM500, whether from foreign or local suppliers,” he added. – August 25, 2022.