Tag Archives: Tax

Malaysia Extends SSPN Tax Relief Until 2024!

Malaysia Prime Minister Anwar Ibrahim just announced the extension of the SSPN tax relief until 2024! Here is what you need to know!

Malaysia Extends SSPN Tax Relief Until 2024!

On Wednesday, 29 March 2023, Malaysia Prime Minister Anwar Ibrahim announced the extension of the SSPN tax relief until 2024!

The Prime Minister said that the decision was made after many quarters asked the government to consider the tax relief that was not included in the revised 2023 budget.

The SSPN tax break is expected to cost the government RM250 million (US$56.8 million) in tax revenue. The tax relief is limited to the first RM8,000, after being increased from RM6,000 in the 2019 budget.

I have agreed to extend this tax exemption until 2024 that will benefit 400,000 taxpayers and cost the government RM250 million.

Earlier : SSPN Tax Relief Missing From Malaysia 2023 Budget!

SSPN (Skim Simpanan Pendidikan Nasional) – the National Education Savings Scheme, is a government-backed savings scheme designed to help parents save and invest those savings for their children’s higher education.

In past years, parents in Malaysia who put away money into SSPN for their children’s higher education enjoyed tax relief on the first RM8,000 contributed to the fund for the year.

The re-tabling of Budget 2023 for Malaysia noticeably did not include an extension of the SSPN tax relief. The Finance Bill 2023, which the government is proposing to amend the Income Tax Act 1967 with, includes this amendment:

Subparagraph 4(a)(iv) seeks to delete paragraph 46(1)(k) of Act 53 as the amount deposited by an individual for his child into the Skim Simpanan Pendidikan Nasional shall no longer be allowed as a deduction under Act 53. This amendment has effect for the year of assessment 2023 and subsequent years of assessment.

As a result, SSPN earlier posted a notice on its website saying that it is seeking clarification from the government on the tax relief.

The announcement by the Prime Minister that the SSPN tax relief would be reinstated will definitely be a relief to parents who have had to put up with high inflation.

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New 10% Sales Tax On Cheap Imports In April 2023!

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The Malaysian government will implement a new 10% sales tax on cheap import, starting 1 April 2023!

Here is what you need to know about the new sales tax on low value goods that are imported into Malaysia!

New 10% Sales Tax On Cheap Imports In April 2023!

From 1 April 2023 onwards, the Royal Malaysia Customs Department (RMCD) will start collecting a new 10% sales tax on all low value goods (LVG) worth less than RM 500 that are sold online, and delivered from overseas to customers in Malaysia, except:

duty-free islands like Labuan, Langkawi, Tioman and Pangkor
designated duty-free zones in airports, etc.

The 10% sales tax will apply only on overseas low-value goods (worth less than RM 500) purchased online from 1 April 2023 onwards. It will not be imposed on delivery charges or insurance paid to import the item.

For example, if you purchase an item that costs RM 450 from an online shopping portal, with a delivery charge of RM 15.

Before 1 April 2023, you will pay only RM 465 (RM 450 for the item + RM 15 for the delivery costs).

From 1 April 2023 onwards, you will need to pay RM 510 (RM 450 for the item + RM 45 for the new 10% sales tax + RM 15 for the delivery costs).

The online shopping portal will add the new sales tax, so you are aware of the final price before purchasing the item from 1 April 2023 onwards.

Even though the sales tax does not apply to delivery charges or insurance fees, you should expect to pay close to 9%-10% extra for imported low-value goods purchased online.

It should also be noted that Malaysia implemented a 6% service tax on delivery services (except for food and beverages) in July 2022.

New 10% Sales Tax On Cheap Imports : Frequently Asked Questions!

Here are the answers to frequently asked questions about the new 10% sales tax on low-value imported goods in Malaysia:

Question : When will the new 10% sales tax on imported low value goods begin?

The new 10% sales tax applies from 1 April 2023 onwards when you make payment, not on delivery of goods.

For example, if you purchase an item on 31 March 2023 and…:

pay on purchase (31 March) : you won’t have to pay the 10% sales tax, even if you eventually receive the item on April 5, 2023
pay on delivery : you will have to pay the 10% sales tax if the item is delivered on or after 1 April 2023.

Question : What goods are affected by the new 10% sales tax on imported low value goods?

The 10% sales tax applies to all low-value goods (worth less than RM500) purchased online, except:

cigarettes and other tobacco products
smoking pipes, including pipe bowls
electronic cigarettes, and similar electric vapourising devices
non-nicotine liquid or gel preparations used for vaping (e-cigarette smoking) devices
intoxicating liquor, and other imported alcohol

Question : If you are a LVG seller, must you register with the RMCD?

The Royal Malaysia Customs Department (RMCD) only requires such sellers to register with them:

sell low value goods (worth less than RM500) online,
that are delivered from overseas,
with more than RM500,000 in total sale value of low-value goods brought into Malaysia in 12 months (defined as the immediate past 12 months before registration, or the current month and the next 11 months)

The RMCD structured it this way so that only large online shops or e-commerce platforms need to register with it, to help collect the new sales tax.

If you are selling your low-value goods through an e-commerce platform like Shopee or Lazada, they will handle the sales tax on your behalf.

Question : How does the sales tax system work for sellers?

Sellers who must register with the RMCD, should do so through the MyLVG online system, using the LVG-01 form. Registration is open from 1 January 2023 onwards.

The seller is required to declare the collected sales tax to the RMCD every three months through the MyLVG system using the LVG-02 form, and pay the collected tax to the RMCD by the last day of the next month.

For example, the ABC e-commerce platform collected RM 1 million in sales tax from April to June 2023.

It must submit its LVG-02 form and pay the collected RM 1 million by 31 July 2023.

If the seller makes a mistake and overpaid the collected tax, it can apply for a refund using the LVG-03 form.

The seller can also cancel its registration using the MyLVG system, if it no longer sells low-value goods, or if the total sales value of LVG in 12 months does not exceed RM 500,000.

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He continues to devote countless hours every day writing about tech, medicine and science, in his pursuit of facts in a post-truth world.

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New Taxes On Small Online Purchases + Delivery In Malaysia!

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There will soon be new taxes on small online purchases and delivery in Malaysia! Here is what you need to know…

New Taxes On Small Online Purchases + Delivery In Malaysia!

There will be soon new taxes on low-value purchases from overseas, and delivery services in Malaysia!

These taxes were announced in Budget 2022, but you may not be aware of it.

6% Service Tax On Delivery Services

From 1 July 2022 onwards, delivery services are subject to 6% service tax, for delivering goods other than food and beverages, and logistics delivery services.

This 6% service tax applies to e-commerce platforms as well, so expect the cost to be passed to you – the customer.

10% Sales Tax On Low Value Imports

Currently, goods imported from overseas that are delivered via courier services through specific international airports in Malaysia are not subject to the 10% sales. tax, if the value of each consignment (parcel) does not exceed RM 500.

Budget 2022 removed that exemption, which means all imported goods will be taxed, regardless of value.

From 1 January 2023 onwards, online sellers of low value imported goods delivered by air courier worth less than RM 500 per consignment must charge their customers a 10% sales tax. Otherwise, the purchaser will be subject to an import tax.

This sales tax applies to both local and foreign merchants. But the government has yet to reveal the mechanism by which foreign merchants will register, process and forward the collected sales tax.

Why New Taxes On Small Online Purchases + Delivery?!

Taxing low cost value goods purchased overseas is a way to level the playing field between local and foreign manufacturers.

Malaysian products are already subject to a 5% or 10% sales tax, which places them at a disadvantage when competing with low value imports that are currently tax-free.

That’s why many countries like Australia and New Zealand implement similar taxes, to align with local sales tax.

Even Singapore will be implementing a 7% GST on low value goods (LVG) from 1 January 2023 onwards, increasing it to 9% by 2025.

This sales tax on imported LVG will no doubt raise revenue for the government, but it is inline with what other countries are implementing to level the playing field, and encourage purchases of local products.

The 10% sales tax may seem high, but it does not apply to low value goods imported via sea or land.

This sales tax will not affect the RM1,000 exemption for travellers bringing in goods purchased overseas through the seven designated international airports in Malaysia.

The 6% service tax on delivery services is a new revenue stream for the government, although they have exempted food and beverage deliveries, as well as logistics deliveries.

Whatever the reasons are – expect to pay more for your online purchases!

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Dr. Adrian Wong has been writing about tech and science since 1997, even publishing a book with Prentice Hall called Breaking Through The BIOS Barrier (ISBN 978-0131455368) while in medical school.

He continues to devote countless hours every day writing about tech, medicine and science, in his pursuit of facts in a post-truth world.

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Will Section 106A Let LHDN Access Your Bank Accounts?

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Will the Section 106A amendment let LHDN access your bank accounts, without consent or knowledge?

Let’s take a look at the controversial amendment, and find out what FACTS really are!

Section 106A : Does It Let LHDN Access Your Bank Accounts?

Section 106A was just added to the Income Tax Act 1967, with the passing of the Finance Bill 2021 on 15 December 2021.

This section empowers the Inland Revenue Board (LHDN or HASiL) to access bank account information for the purpose of making garnishee order applications.

The director-general may, by notice under his hand, require any financial institution to furnish, within a specified time in the notice, the bank account information of that person, if any, or the purpose of making an application to court for a garnishee order

A garnishee order is used by creditors to collect debts from debtors by “garnishing” their bank accounts, and is nothing new.

However, much was made about Subsection (2) which states that financial institutions ordered to furnish the bank account information will not be allowed to disclose to anyone that such a request has been made.

So what’s really going on?

Section 106A Lets LHDN Access Bank Accounts For A LIMITED Purpose…

Many people have been sharing articles on Section 106A, claiming that it will allow LHDN to collect information on how much money they really have, in order to collect additional taxes.

Some even suggested (jokingly or otherwise) that people should withdraw their cash to keep at home, to avoid LHDN “garnishing” their hard-earned money.

The truth is – Section 106A only lets LHDN access bank account information for a specific and LIMITED purpose.

Let me summarise the key points :

LHDN can only ask for your bank account information for the explicit purpose of making a garnishee order application.
Before such a garnishee proceeding can begin, you would have already undergone a civil proceeding, which ended with a judgement against yourself.
Hence, the requirement that the Director-General must have a “notice under his hand”, before LHDN can proceed with the garnishee order application.
Before LHDN can make a garnishee order application, it must know which bank accounts you have. This is where they use Section 106A to make that request to the bank.
Only once LHDN has obtained your bank account information, can it make an application to the court for a garnishee order, to recover the tax you owe.
Subsection (2) prohibits financial institutions from informing you about such potential garnishee proceedings, to prevent you from moving your money out of those bank accounts.

Section 106A does NOT allow LHDN to request for bank account information for other purposes, whether it is to determine how rich you are, or for tax audit purposes.

Section 106A is also limited to banks, including Islamic banks and development financial institutions. It does not extend to investment fund accounts, so it wouldn’t really help LHDN in looking for people evading taxes.

Section 106A Access To Bank Accounts : Official LHDN Statement

On 18 December 2021, LHDN issued a press statement clarifying its access to your bank account. It is in Bahasa Malaysia, so here is my English translation :

ACCESS TO TAXPAYER BANK ACCOUNT HAS LIMITS

Inland Revenue Board (HASiL) refers to several news reports about HASiL’s power to access taxpayer bank accounts without first obtaining the account holder’s consent.

HASiL would like to clarify that the new S106A amendment of the Income Tax Act (ACP) 1967 that was approved in the Finance Bill 2021 on 15 December 2021 has granted HASiL the right to obtain taxpayer bank account information only for cases that involve garnishee orders in any court that has decided to allow the garnishee proceeding.

Garnishee proceeding is a process to enforce monetary judgements by seizing or freezing debts that must be repaid to any party, in this case HASiL, if there are tax arrears that have not be paid by the taxpayer.

This new amendment will help HASiL administer the country’s direct tax system more effectiveness by minimising tax leakage by taxpayer’s failure to pay their existing tax arrears, while increasing the rate of voluntary tax compliance.

Nevertheless, the power under this new amendment does not give HASiL absolute power to access taxpayer bank accounts frivolously. It must undergo a specific judicial process, and is limited to accesses that have already undergone civil proceedings earlier.

Taxpayers who are willing to handle their tax obligations in an orderly manner do not need to worry about this S106A ACP 1967 amendment as it does not apply to them.

In conclusion, the new S106A ACP 1967 amendment only gives HASiL the power to obtain taxpayer bank account information after garnishee proceedings are permitted by the court. HASiL once again stress that taxpayer bank account information that do not involve garnishee action cannot be accessed by HASiL through this amendment.

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Dr. Adrian Wong has been writing about tech and science since 1997, even publishing a book with Prentice Hall called Breaking Through The BIOS Barrier (ISBN 978-0131455368) while in medical school.

He continues to devote countless hours every day writing about tech, medicine and science, in his pursuit of facts in a post-truth world.

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Personal Income Tax Guide in Malaysia 2016

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KUALA LUMPUR, 30 March 2016 – Preparing and filing your income tax in Malaysia can be a challenging and anxiety-inducing experience every year for most people. Most Malaysians are unaware of the differences between tax exemptions, tax reliefs, tax rebates and tax deductibles.

With iMoney’s ‘The Definitive Guide To Personal Income Tax in Malaysia For 2016’, you can be worry-free this income tax season as you go through their simple and easy-to-understand guide. The comprehensive guide which consists of 11 chapters will help you to understand how income tax works from what all the terms mean to how exactly you can file.

Lee Ching Wei, CEO and Co-Founder of iMoney said: “At iMoney, we understand the complexity of navigating through the income tax fling process, especially if you are a first-timer. We have put together a personal income tax guide filled with flowcharts and infographics to simplify concepts and help you file your taxes like a pro.”

Equipped with the correct knowledge, filing your taxes will no longer be a daunting task and most importantly you will be able to maximise on the tax reliefs available and get the tax savings you are eligible for.

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