Amendment to Sales Tax Act, tabled for first reading in Parliament, now includes online sellers

KUALA LUMPUR, Aug 1 — Deputy Finance Minister II Yamani Hafez Musa tabled the Sales Tax (Amendment) Act 2022 for its first reading in the Dewan Rakyat today.

The amendment is essentially an update to the Sales Tax Act 2018, and aims to impose sales tax on low value goods sold by sellers through online marketplaces such as Shopee, Lazada and other websites that deliver goods in the country.

The amendment seeks the inclusion of a new provision in Section Part III(A) to define three terms: “Low value goods”, “seller”, and “registered seller”.

According to the proposed amendment, the definition of seller will now include a person who sells low value goods on an online marketplace — regardless of citizenship or geographical location.

Previously, the Act imposed sales tax on goods manufactured in Malaysia, or imported into the country. That meant only manufacturers and importers were under the jurisdiction of the finance minister.

The amendment to Section 106 (2) means that sellers would come under the minister’s jurisdiction to make regulations over registration.

The amendment also expands the finance minister’s power to make regulations that are related to determining the sales value of low value goods.

Additionally, the amendment confers powers to the Customs and Excise Director General (DG) to cancel the registration of a registered manufacturer if they have been exempted from registration subsection 20(1).

Subsection 20(1) provides the finance minister power to exempt any class of persons from registration.

The amendment also seeks to include a new provision in Section 57 to address the deficiency in the quantity of taxable goods in certain designated areas, such as free zones, registered warehouses, licenced manufacturing warehouses, and the Malaysia-Thailand Joint Development Area.

The new Section 57A (1) states that if the DG finds a deficiency in the quantity of taxable goods, or if there is no proof otherwise, the person in possession of the goods will be presumed to have transported them into the country illegally.

The amendment also states that the person in possession of the goods will be liable to pay the sales tax on the date the quantity of the goods was found to be deficient.

However, Section 57A (2) says that if the DG is satisfied that the deficiency was caused by an unavoidable accident, such as leakage or breakage, the DG may remit the whole or part of the sales tax.