Low Value Goods (LVG) Tax and Import Duty on Overseas Online Shopping

What counts as low value goods

Low value goods (LVG) are goods sold online at a price not exceeding RM500 per item and brought into Malaysia by land, sea or air. The RM500 test looks at the price of the goods themselves — transportation, insurance and other charges are excluded, so a RM480 jacket with RM40 shipping is still LVG.

The test is per item, not per order. Buying eight RM300 items in one basket is eight lots of LVG, not a RM2,400 import. Conversely, one RM600 item in a basket of cheap goods is not LVG at all and falls into the border-tax route below.

Four categories are carved out of the LVG regime entirely and are taxed at import in the normal way: cigarettes, tobacco products and preparations for smoking; smoking pipes; electronic cigarettes and similar personal vaporising devices; and intoxicating liquor.

The 10% is charged by the seller, not by Customs

This is the part that surprises people. Nobody collects LVG tax at the airport. An overseas or local online seller whose total sale value of LVG brought into Malaysia exceeds RM500,000 in a 12-month period must register with the Royal Malaysian Customs Department as a Registered Seller, on form LVG-01, and charge 10% sales tax at the point of sale. The definition of seller includes online marketplace operators, which is why the large platforms are all registered.

Registered Sellers file quarterly on form LVG-02 with a three-month taxable period, paying by the last day of the month after the period ends. The tax must be shown on the invoice or receipt issued to the buyer.

Two practical consequences follow. First, whether you pay the 10% depends on the seller, not on the goods: a small unregistered overseas shop below the RM500,000 threshold has no obligation to charge it, and no tax is collected at the border either. Second, the tax is charged on the value of the goods when they are sold, so if a parcel is lost, seized or returned you deal with the seller — not with Customs.

Above RM500 — duty and sales tax at the border

Goods above RM500 are ordinary imports. Two taxes stack, and they stack in a specific order that matters more than most people expect:

• Import duty, charged on the customs value of the goods — cost, insurance and freight (CIF). The rate depends on the tariff code, and ranges from 0% to 60%; many electronics and books are 0%, while clothing, footwear and furniture commonly sit at 10% to 30%.
• Sales tax, at 5% or 10% depending on the goods, charged on CIF plus the import duty (plus excise duty, where the goods attract it). Sales tax is calculated on a base that already includes duty, so the two are not simply added together.
• Excise duty, on a narrow list of goods including motor vehicles, alcohol and sugary beverages.

Worked example — the same RM800 jacket, both routes

A jacket priced at RM800 with RM60 shipping is not LVG. Customs value is RM860. At a 10% import duty rate, duty is RM86. Sales tax at 10% is charged on RM860 + RM86 = RM946, giving RM94.60. Total tax is RM180.60 — an effective 21% on the goods, before the courier adds its own customs clearance and handling fee, which is a commercial charge and not a tax.

Split the same spend into two RM400 jackets from a Registered Seller and the arithmetic changes completely: 10% LVG sales tax on each, RM80 in total, charged in the cart with no duty, no clearance fee and no border delay. That gap is why LVG exists — before 2024 the small parcel would have arrived entirely untaxed, while the local retailer selling the same jacket paid sales tax on its own imports.

The RM500 de minimis still applies at the border

The old de minimis relief was not abolished when LVG arrived — the two now work together. Goods imported by air courier service through designated international airports with a total value not exceeding RM500 remain exempt from import duty and sales tax at the point of import. LVG tax replaces that lost revenue at the point of sale instead.

The relief is narrower than its reputation. It is tied to air courier consignments through the designated airports, so goods arriving by sea or land freight do not get it, and consignments consolidated above RM500 lose it. This also explains an apparent double-tax worry that does not materialise for most shoppers: the RM300 item taxed 10% in your cart is not taxed again on arrival, because it falls inside the de minimis at the border.

Common misreadings

• It is sales tax, not service tax. The 10% on goods is a different tax from the 8% service tax on digital services such as Google Ads or streaming subscriptions — separate regimes, separate registrations, separate returns.
• It is not a customs duty on your parcel. LVG tax is a seller-collected sales tax; there is no bill to settle before the courier releases the goods.
• Businesses cannot claim it back. SST has no input tax credit, so LVG tax on goods you buy online for your business is a permanent cost, not a recoverable one.
• The rate is flat 10% for LVG, even where the same goods imported above RM500 would attract sales tax at only 5%.
• Courier handling and clearance fees are the courier's own charges. They are not the tax, and complaining to Customs about them will not help.

Important caveats

Tariff classification is what drives the import duty rate, and it is genuinely technical — the same garment can fall into different codes depending on fibre content and construction. Where the amount at stake is material, check the rate against the current Customs Duties Order for the specific tariff code, or ask the forwarder to confirm the classification before shipping. Rates, the RM500 threshold and the designated-airport list are all set by order and can change in any budget cycle; confirm current figures on mysst.customs.gov.my before relying on them.

Use the calculator below to work either route: set the rate to 10% to see the LVG tax on a cart, or apply the sales tax rate to a CIF-plus-duty figure to get the landed cost of a parcel above RM500.