KUALA LUMPUR, Aug 25 — DAP lawmaker Lim Guan Eng today cautioned against implementing the 10 per cent online sales tax for low-value goods (LVG) below RM500.

The party chairman and former finance minister said the government, if in search of extra revenue, could opt for a 15 per cent global tax on multinational enterprises (MNEs) instead, which would be more than sufficient to replace the 10 per cent online sales tax on all LVG whether from foreign or local suppliers.

"Would it not make more sense as well as compassion to rake in extra revenue from profitable MNEs instead of the lower income groups?

"DAP had proposed that the 10 per cent sales tax on online purchases of LVG below RM500 from local suppliers should be waived instead of imposing the 10 per cent online sales on foreign suppliers to create a level playing field so that local suppliers can enjoy the same benefits as foreign suppliers.

"Further, such a waiver would also help to reduce the financial burden of low-income groups who normally buy LVG online,” said Lim in a statement here.

Lim was referring to the government’s target to earn an additional RM200 million in revenue.

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

"Malaysians do not need new taxes nor any increase in interest rates 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,” he said.

Lim also cited the Inland Revenue Board (IRB) that had in October 2021 said the Organisation for Economic Co-operation and Development (OECD) announced that 136 countries have agreed that certain MNEs will be subject to a minimum tax rate of 15 per cent in 2023.

He pointed out that the IRB said that the tax rate of 15 per cent would reallocate profits of more than USS$125 billion (RM556.62 billion) from about 100 of the world's largest and most profitable MNEs to all countries.

"Under the IRB multinational tax branch, there are close to 3,000 MNEs, which would mean extra hundreds of millions of extra revenue when the 15 per cent tax rate is implemented on January 1, 2023.

"With the extra revenue there is no need to impose the 10 per cent sales tax on all online sales for LVG below RM500 next year,” adding that the government has imposed a flat 10 per cent sales tax by January 1, 2023 on LVG below RM500 purchased online from foreign suppliers and delivered to Malaysia to create a level playing field with local suppliers.

Lim reminded that currently, LVG priced at RM500 and below are not subject to any tax when they are imported to Malaysia.