Malaysian low-value tax scheme

Malaysia implemented the LVG scheme to prevent non-resident companies from having an unfair tax advantage over local businesses, following the example of Australia, New Zealand, and Singapore. The scheme was introduced on January 1st, 2023, and sales tax will be imposed starting from April 1st, 2023, at a rate of 10%.

Determining low value 

A low-value import is anything sold cross-border with a value under 500 MYR.

Impact on cross-border 

The scheme affects your business directly if you exceed the threshold of 500,000 MYR within a 12-month period. Once you cross this threshold, you must register, collect, and remit on all LVG into Malaysia. The LVG collection only applies to the Freight On Board (FOB) or product price, excluding any shipping, insurance, or other accompanying fees.

If your total order value doesn't exceed the aforementioned threshold, the duty and tax de minimis into Malaysia is 500 MYR. At checkout, the total amount of the cart is compared to the de minimis value of 500 MYR, which includes the cost of the product, insurance, and freight (CIF).

Contact Support: If you need assistance in determining whether this scheme applies to you, please reach out to our support team.

If you exceed the threshold 

If you exceed 500,000 MYR in LVG orders into Malaysia annually, there are two simple steps to ensure compliance with Malaysian government regulations:

1. Register for a tax ID with the Malaysian Customs Department. The self-sign portal enables you to register and begin the process of requesting a tax ID and any future filings.

2. Collect and remit the 10% tax on all LVG. With Zonos' guaranteed Landed Cost do the remittance and registration on your behalf.

The shipping documentation should be in English or Malay and include the following details:

• Serial number of the invoice
• Date of the invoice/document
• Name and address of the registered seller along with their registration number

Best remittance practices 

The timing convention used to assess accurate time and date is using Malaysian Standard Time (MST).

The Malaysian Customs Department considers the taxable period to be three months ending on the last day of any month. Penalties apply for late payments, so it's highly recommended that payments are made no later than the last day of the following month of the taxable period. Payments must be completed via Telegraphic Transfer (TT), as the Financial Process Exchange (FPX) requires the seller to have a bank account in Malaysia.

If you stop selling LVG into Malaysia or don't exceed 500,000 MYR within the last 12 months, you can cancel your registration for LVG. It's important to note that the final return should be filed no later than 30 days after canceling the registration, even if you didn't earn any income from LVG orders.