KUALA LUMPUR: The implementation of a 10% sales tax on low-value goods (LVG) costing RM500 and below sold online would allow local businesses to market their products of the same quality at an even selling price, thus boosting consumer demand.
Putra Business School economic analyst Assoc Prof Dr Ahmed Razman Abdul Latiff said the tax would allow for the stabilisation of price between imported and local goods, as imported LVG are currently not subjected to any tax while a 6% sales and service tax (SST) is imposed on locally produced items, resulting to it being sidelined by consumers.
The tax would start on Jan 1 next year.
“If there are identical goods in terms of function and utility produced by local and foreign manufacturers, the production costs will undoubtedly be more or less the same, resulting in the same selling price but the 6% SST will make local goods more expensive,” he told Bernama.
He said the introduction of the LVG tax would make local goods appear more affordable and attract demand.
“This tax is only imposed on goods valued at less than RM500, so even though the tax rate is 10%, it is not burdensome as it applies only to low-value items,” he said.
Source: The Star