KUALA LUMPUR: The Small and Medium Enterprises Association (Samenta) Malaysia today said tax on low value goods (LVG) is good news for local retailers, and will help narrow inequality and allow local sellers, including small and medium enterprises (SMEs), to compete on the basis of superior service, proximity, and better local consumer protection.
It said in a statement that the mandatory registration as well as 10 percent tax on LVG will also drive additional revenue to Malaysia and support the ringgit, while promoting domestic e-commerce.
Samenta has also online marketplaces to immediately facilitate the implementation of the tax for both local and foreign sellers who have met the threshold.
Samenta also said the additional costs should not be transferred to local sellers. In a statement today, the association said it fully supports the implementation of the LVG tax with effect from Jan 1, 2024.
"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," it said.
Samenta was among the early proponents of the "equalising tax" and is grateful that the government is taking resolute steps to implement LVG, despite the strong lobby from online marketplaces.
Samenta national president Datuk William Ng said that for many years, local retailers and online sellers, especially SMEs, were fighting an unfair competition against foreign sellers.
"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 dropshippers who have largely escaped from paying tax to Malaysia on their products."This artificially distorts pricing in favour of these foreign sellers," he added.
Ng said that additionally, directly delivered foreign products may not have undergone the same stringent quality and safety tests for electrical goods, foodstuff and pharmaceutical products that Malaysian manufacturers and importers are subject to.
He said this could pose fire, safety and health risks to Malaysian consumers.