The following indirect tax developments will be of interest to taxpayers in Malaysia:
- Deferral of the imposition of Sales Tax on Low-Value Goods (LVG): The implementation of sales tax on LVG was initially announced during Budget 2022, with the proposed effective date set for 1 January 2023 and then subsequently postponed to 1 April 2023. On 10 March, the Royal Malaysian Customs Department announced that the implementation is further deferred to a date to be determined.
- Re-introduction of Special Voluntary Disclosure Program (SVDP 2.0) for indirect taxes: The re-introduction of SVDP 2.0 was announced during the re-tabled Budget 2023. SVDP2.0 allows businesses to voluntarily disclose any outstanding indirect taxes (as well as direct taxes (see the article on the SVDP for direct taxes). The benefits of joining SVDP 2.0 include the remission of penalties, the waiver of compounds and an exemption from audits within specific periods.
SVDP 2.0 applies from 6 June 2023 to 31 May 2024 and covers indirect taxes payable up to 28 February 2023, except for tax liabilities under investigation or at trial, under audit or where bills of demand have been issued. The scope of SVDP 2.0 covers sales tax, services tax, goods and services tax and tourism tax, but not import taxes. Eligible participants include registered person that have failed to submit returns or have undeclared/underpaid taxes. Taxpayers electing to participate in SVDP 2.0 must pay the due in full, either by making a lump sum payment or instalment payments, and applications are made online.
- Proposal for introduction of a Luxury Goods Tax (LGT): The government announced the possible introduction of an LGT during the re-tabled Budget 2023. The Ministry of Finance has obtained feedback from key stakeholders and is reviewing various aspects, such as the goods involved, implementation timeline and tax rates but no further details have been announced.
Comments
Staying updated on indirect taxes in Malaysia is crucial for businesses and taxpayers. The proposal for an LGT is still under review by the Ministry of Finance but concerns have been raised by stakeholders. The deferral of the implementation of Sales Tax on LVG may indicate a shift in the government's approach, and SVDP 2.0 presents an opportunity for businesses to rectify their tax obligations without incurring penalties or compounds.
Chan Kwan Yee
David Lai
BDO in Malaysia
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