Cross-Border E-Commerce Imports and Low Value Goods Tax (Malaysia)

When cross-border e-commerce sells goods into Malaysia, the most critical new rule is the Sales Tax on Low Value Goods (LVG). Since 1 January 2024, goods with a per-item overseas sale price of RM500 or below imported into Malaysia by sea, land, or air are subject to a 10% sales tax; the registration and tax-collection obligation is borne by the seller (instead of the previous exemption). Any local or overseas online seller whose total LVG sales into Malaysia exceed RM500,000 within 12 months must apply to register with the Royal Malaysian Customs Department (RMCD), obtain an LVG Registration Number (LVGRN), and handle registration and filing through the MyLVG portal (mylvg.customs.gov.my).

Key points of the LVG tax

Why does LVG exist?

In the past, small parcels imported with a per-item value of RM500 or below were mostly tax-exempt, creating unfair competition against local retailers and sellers who already pay SST domestically. The LVG regime brings small-value cross-border e-commerce imports into the tax net, bringing the tax burden of overseas sellers into line with that of local sellers. So if you sell products into Malaysia via drop-shipping / small parcels, LVG very likely applies.

Note that the LVG registration and tax-collection obligation falls on the seller, not the consumer or logistics provider; reaching the threshold without registering, or registering but not collecting and filing tax truthfully, are both violations, and RMCD can recover and penalise under the Sales Tax Act. If you sell through an e-commerce platform, you should also confirm how the platform assists with collecting LVG in its logistics and tax integration, to avoid double collection or under-collection.

Practical decisions for cross-border sellers

1. Check the per-item sale price: is it RM500 or below? If yes, it falls under LVG.
2. Check the 12-month total sales into Malaysia: exceeding RM500,000 means you must register for an LVGRN.
3. Register and collect tax: after registering, add 10% LVG sales tax on the sale price at the point of sale, and file and pay according to the cycle prescribed by RMCD.
4. Goods over RM500: do not go through LVG, but instead pay duty and sales tax under ordinary import customs clearance (K1).

The divide between LVG and ordinary import customs clearance

LVG does not replace customs clearance; it targets "small-value, online, direct-to-consumer" goods. Goods with a per-item value over RM500 still go through the ordinary import process: declared to RMCD on a K1, with duty and sales tax calculated on the CIF customs value (for the calculation, see How to Calculate Import Sales Tax (SST)). So cross-border sellers commonly run two tracks in parallel: small items go through LVG, and large / bulk items go through ordinary customs clearance.

Listing on a platform does not equal compliance

When listing on a Malaysian storefront on Shopee, Lazada, and similar platforms, beyond LVG tax you must also address category certification and labelling: food, cosmetics, health supplements, electrical appliances, and communications products each have their own regulator's (FSQD, NPRA, SIRIM, ST, MCMC, etc.) certification and labelling requirements (for which categories need which certifications, see What Certifications Do You Need to Sell Online). Tax compliance and product compliance are two separate lines, and both must be passed.

Common mistakes

• Assuming small parcels are tax-free: since 2024, small parcels of RM500 or below are already included in the 10% LVG.
• Not registering for an LVGRN once at the threshold: exceeding RM500,000 of sales into Malaysia in 12 months without registering is a violation.
• Miscalculating the tax base: LVG is calculated on the product sale price, excluding freight and insurance; do not lump freight in or, conversely, omit it.
• Focusing only on tax and ignoring certification: LVG only resolves sales tax; the product must still meet category certification and labelling requirements.
• Confusing the RM500 boundary: goods over RM500 go through ordinary customs clearance, not LVG.

Frequently asked questions (FAQ)

Q: What is the LVG rate? What is the tax base? 10%, calculated on the sale price of the goods, excluding freight, insurance, and other taxes and charges.

Q: What kind of goods count as "low value goods"? Goods with a per-item overseas sale price of RM500 or below imported into Malaysia by sea, land, or air. Goods over RM500 are not subject to LVG and instead go through ordinary import customs clearance.

Q: I am an overseas seller — when must I register? When your total LVG sales into Malaysia exceed RM500,000 within 12 months, you must apply to register with RMCD, obtain an LVG Registration Number (LVGRN), and file through the MyLVG portal.

Q: Which goods are not subject to LVG? Cigarettes, tobacco products, intoxicating liquor, and smoking pipes are not included in LVG, because these items are already separately subject to import duty, excise duty, and sales tax.

Q: Once I register for LVG, is the product compliant? No. LVG only handles sales tax; the product itself must still meet the certification and labelling requirements of each category regulator (food, cosmetics, health supplements, electrical appliances, etc.) to be fully compliant.

Self-check checklist

• [ ] Confirmed whether the product's per-item sale price is RM500 or below (whether it falls under LVG)
• [ ] Estimated whether the 12-month total LVG sales into Malaysia exceed RM500,000
• [ ] Registered on MyLVG and obtained an LVGRN if at the threshold
• [ ] Added 10% LVG on the sale price (excluding freight and insurance) and filed on time
• [ ] Arranged ordinary customs clearance (K1) for goods over RM500
• [ ] Product category certification and labelling meet the corresponding regulator's requirements

Summary

When cross-border e-commerce sells into Malaysia, first separate two things: tax and certification. The core of tax is LVG — small items of RM500 or below get a 10% sales tax, and sales into Malaysia over RM500,000 in 12 months require registering for an LVGRN; goods over RM500 go through ordinary customs clearance. Certification depends on the category, and listing on a platform does not equal compliance. Work out the RM500 boundary and the registration threshold clearly, then confirm that the product labelling is in place, to operate with peace of mind.

Run a free label check now

This article is compiled from official sources for reference only; actual compliance is subject to the latest official text and review by the competent authorities.