Effective 1 January 2024, the Low-Value Goods Tax is implemented on the imported goods sold online.
As reported by The Edge, the new tax is applied to e-commerce platforms to rectify tax treatment disparities between retail and online businesses, including micro, small and medium enterprises (MSMEs).
In this article, we explain:
- What is Low-Value Goods Tax?
- The impact of Low-Value Goods Tax on purchasing power
- Tips & tricks on promoting products with Low-Value Goods Tax in placed
What is Low-Value Goods Tax?
The Royal Malaysian Customs Department (RMCD) stated that the 10% sales tax for low-value goods will be charged on all imported goods sold online at a price less than RM500.
Imported products brought into Malaysia by land, sea or air are subject to the new tax.
The new tax is not applied to the following selected items:
- Cigarettes
- Tobacco products
- Liquors
- Electronic cigarettes
- Any products related to smoking
The sales tax is charged on the sale value of products online, not including any tax, duty, fee or other charges such as transportation, insurance or additional costs.
Based on the guide provided by the department (updated 3 November 2023), here are a few examples of how Low-Value Goods Tax is used on e-commerce platforms.
The sales tax also applied to items at discounted prices as sale value:
Vouchers used for sales items will not be affected by the sales tax. The sales tax only applies to the actual sales value of items.
How does Low-Value Goods Tax impact purchases?
With the implementation of the new tax on imported low-value goods, there may be increases in the prices of products online, which will impact the customers’ purchasing decisions.
Because of that, customers may reduce their spending on non-essential or low-value items. Alternatively, they might look for items not impacted by the sales tax to avoid additional costs.
Customers will perceive the value of low-value items and weigh the added costs against the benefits of convenience and access to a wide range of products online.
Online shopping habits will shift to fewer items added to the cart before making their payments or making purchases in other channels (such as physical stores), leading to the possibility of decreased performance for brands and affiliate partners.
Here are ways to promote your recommended products to your followers in a taxed e-commerce landscape.
3 ways to promote products with Low-Value Goods Tax
Promote local businesses in Malaysia
We encourage you to promote micro, small and medium businesses using popular e-commerce platforms as their primary source of income earned from online sales.
Bridge the gap between your followers and local businesses where they can find better deals on domestic products instead of products outside of Malaysia.
You will have better engagement and loyalty with your followers by fulfilling their interest in purchasing domestic products. This approach helps build your credibility through support for local businesses.
Suggest must-have products at affordable prices
Take some time to browse through the products displayed by local businesses online.
Identify domestic products with the same quality as the imported products at affordable prices.
We recommend looking for products that have already been discounted without vouchers and promo codes.
Look through your performance report and conversion report on the Involve Dashboard, which helps you strategically promote your following domestic products on promotional content.
Check out our detailed guide to the Consumer Insights Report to help you make better-informed decisions in promoting to your target audience and increasing your affiliate commissions.
Create educational content
Make content that educates your followers about the low-value goods tax and provides cost-saving tips on online shopping for domestic products.
Share your experience purchasing products at local businesses online with your recommended products based on followers’ preferences.
Showcase the perks of recommended products to help followers justify the price and product quality.
Your authentic voice will help reassure your followers in making purchasing decisions effectively at e-commerce platforms, leading to higher engagement, sales, and commissions.
Hope this guide helps you strategically publish engaging promotional content online to drive engagement with followers and earn more commissions from your favourite brands.
Click below to log in to the Involve dashboard and generate affiliate links for specific products to recommend to your followers.
