Kuala lumpur: Malaysia offers no blanket sales tax exemption on goods imported through foreign online portals, Finance Minister II Datuk Seri Amir Hamzah Azizan said. The minister stated that the exemption only covers items listed under the Sales Tax (Goods Exempted From Sales Tax) Order 2025, regardless of whether the goods are imported or purchased from domestic producers.

According to BERNAMA News Agency, the measure addresses a tax gap where low-value imported goods were not previously subject to sales tax while locally produced goods were. Amir Hamzah highlighted during a session in the Dewan Rakyat that the Low-Value Goods (LVG) provision ensures that all goods, whether domestic or imported, receive equal tax treatment, creating a more level playing field for local businesses.

Amir Hamzah was responding to a question from Tan Hong Pin (PH-Bakri) regarding the mechanism for collecting sales and service tax (SST) or other taxes on online transactions involving foreign sellers or portals. He emphasized that the level playing field reassures domestic businesses that competition is based on quality, value, and service rather than pricing alone.

He further elaborated that through this approach, the government aims to ensure that local sellers are not unfairly burdened and receive support in managing production costs, while imported goods are subjected to a fair tax mechanism. Revenue collected from digital transactions under the Service Tax on Foreign Digital Services (SToDS) and LVG has shown consistent growth, reaching RM802 million in 2021, RM999 million in 2022, RM1.15 billion in 2023, and RM2.01 billion in 2024.

Amir Hamzah noted that SToDS now applies to all foreign service providers that meet the criteria for supplying digital services to users in Malaysia, regardless of the provider’s country of origin. Under this mechanism, foreign digital service providers such as Netflix, Apple, Microsoft, and Google are required to register with the Royal Malaysian Customs Department and collect and remit service tax when their services are used by customers in Malaysia.

He concluded by stating that this ensures foreign providers shoulder the same tax responsibility as domestic providers, supporting a fairer market environment within the digital ecosystem.