DAP chairman Lim Guan Eng said there is no need for the Government to impose a flat sales tax on all low-value goods (LVD) that are sold online.
Instead, the Government should tax multinational enterprises (MNEs) to satisfy its “thirst” for extra revenue, the former finance minister recommended.
This comes after the Dewan Rakyat earlier this month passed the Sales Tax (Amendment) Bill 2022, which imposes a 10% sales tax on LVD goods priced below RM500 that are sold online from foreign suppliers and delivered to Malaysia.
The move, which comes into effect next January onwards, is aimed at creating a level playing field with local suppliers. It is also expected to see the Government earn an additional RM200 mil in revenue.
Similar taxes have already been imposed in other countries such as Singapore, Australia and New Zealand.
In a statement today, Lim reiterated DAP’s position that the 10% sales tax should be waived to help reduce the financial burden of low-income groups, who normally buy LVGs online.
“In other words, the additional RM200 mil in revenue for online LVG foreign purchases and unspecified hundreds of millions of ringgit more collected from online LVG domestic purchases will be borne by the low-income groups,” he said.
He added that Malaysians do not need new taxes or any increases in interest rates when pressing economic issues resulting in high costs of living, ranging from soaring prices of food and materials, a severe labour shortage and a rapidly depreciating ringgit, “remain unresolved”.
The Bagan MP also noted that the Organisation for Economic Co-operation and Development (OECD) had previously announced that 136 countries had agreed that certain MNEs will be subject to a minimum tax rate of 15% in 2023.
“Relocated profits”
He also quoted the Internal Revenue Board (IRB) as saying this 15% tax rate would reallocate profits of more than US$125 bil (about RM556.62 bil) 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 hundreds of millions of extra revenue when the 15% tax rate is implemented on 1 January 2023,” Lim pointed out.
“With the extra revenue, there is no need to impose the 10% sales tax on all online sales for LVGs below RM500 next year.
“The Government’s thirst for extra revenue can be met with the 15% global tax proposed on MNEs, which would be more than sufficient to replace the 10% online sales tax on all LVGs below RM500, whether from foreign or local suppliers.”
He also remarked: “Would it not make more sense as well as compassion to rake in extra revenue from profitable MNEs instead of the lower income groups?”
Sellers using the online marketplace as well as operators of the online marketplace have been advised to keep a close eye on further developments relating to the Sales Tax (Amendment) Bill 2022 as they will need to amend their systems to charge and report the new sales tax and reprice their products accordingly.
Concerns have also been raised over the apparent ambiguity on the goods or classes of goods to be taxed, which is based on the finance minister’s discretion, and the risks of this being open to abuse. – Aug 25, 2022
