Who bears the burden of the new online sales tax?

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Low-income groups will bear the burden of the new online sales tax.

The newly implemented 10 per cent sales tax on online low-value goods (LVG) below RM500 is expected to disproportionately affect low-income households. This is because a significant portion of purchases within this price bracket are made by individuals in lower-income demographics. The government anticipates substantial revenue generation from this tax, which will ultimately be shouldered by these same groups.
Revenue generation from domestic and foreign online sales

The government is projected to collect an additional RM200 million from foreign online purchases of LVG. Furthermore, unspecified hundreds of millions of ringgit more are expected to be collected from domestic online sales of LVG. Both of these revenue streams will ultimately be borne by low-income consumers.
Impact on lower-income households

The imposition of this sales tax on goods priced below RM500 means that lower-income households will face an increased financial burden. This is particularly concerning given the current economic climate, with potential recessionary pressures and rising costs of living. The government's decision to implement new taxes during such a period has drawn criticism.
Sales Tax (Amendment) Bill 2022

This new tax was established through the Sales Tax (Amendment) Bill 2022, which was passed by the Dewan Rakyat on July 4. The amendment seeks to impose a flat 10 per cent sales tax on goods purchased online and delivered to Malaysia from vendors registered with the Ministry of Finance. The new tax rate is set to be implemented next year on low-value goods priced below RM500.

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Who bears the burden of the new online sales tax?

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