LVG tax good news for local retailers, will promote domestic e-commerce, says SME group

THE Small and Medium Enterprises Association of Malaysia (SAMENTA) has lauded the government’s move to implement the low value goods (LVG) tax with effect from Jan 1, 2024.

The association said it had been among the early proponents of this equalising tax, and is grateful that Putrajaya is taking resolute steps to implement them despite the strong lobby from online marketplaces.

“For many years, our local retailers and online sellers, especially small and medium enterprises (SMEs), are fighting an unfair competition against foreign sellers,” said SAMENTA national president Datuk William Ng.

“While local retailers have to pay tax at various points of the supply chain including when bringing in components or raw materials as well as finished goods into Malaysia, we are being undercut by foreign sellers and local drop-shippers who have largely escaped from paying tax to Malaysia on their products.

“This artificially distorts pricing in favour of these foreign sellers.”

Ng said additionally, directly-delivered foreign products may not have undergone the same stringent quality and safety tests for electrical goods, food stuff and pharmaceutical products that Malaysian manufacturers and importers are subject to, which could pose fire, safety and health risks to Malaysian consumers.

“The LVG tax is good news for our local retailers and will help narrow the inequality and allow local sellers, including SMEs, to compete on the basis of superior service, proximity and better local consumer protection,” he asserted.

“The mandatory registration as well as 10% tax on LVG will also drive additional revenue to Malaysia and support the ringgit while promoting domestic e-commerce.”

Ng went on to call for Malaysians to buy from local retailers and sellers not only to support the country’s economy but also better protect themselves and their families from various risks.

“We urge online marketplaces to immediately facilitate the implementation of the LVG tax for both local and foreign sellers who have met the threshold, and to refrain from passing additional costs to local sellers,” he added.

“It is the social responsibility of these marketplaces to help support Malaysian sellers and made-in-Malaysia products, given the extensive regulatory facilitation, promotional support and financial aid given to them by various government agencies for many years.” – Dec 18, 2023

 

Main pic credit: RinggitPlus

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