Malaysia collected nearly RM2.1bil through digital services, low value goods taxes, Amir Hamzah tells Parliament

KUALA LUMPUR: Malaysia collected RM1.62bil from the Service Tax on Digital Services (STODS) and RM476mil from the Low Value Goods (LVG) tax in 2024, Datuk Seri Amir Hamzah Azizan told Parliament Tuesday (Nov 25).

The Finance Minister II said the strong growth showed that the Government’s move to tax cross-border digital services effectively curbed revenue leakage and strengthened compliance in the fast-growing digital economy.

Amir Hamzah said the implementation of sales tax on low-value goods (LVG) and STODS was part of the Government’s broader strategy to ensure that both local and foreign businesses operate on a “level playing field” within Malaysia’s tax system.

The 10% LVG on imported goods below RM500 generated RM476mil in 2024.

The STODS for 2021 was RM802mil, 2022 RM999mil, 2023 RM1.15bil and RM1.62bill in 2024.

Amir Hamzah said foreign digital service providers such as Netflix, Apple, Microsoft and Google must register with the Royal Malaysian Customs Department, collect service tax from Malaysian users and remit it to the Government.

This, he added, ensures foreign providers shoulder tax responsibilities comparable to local companies, supporting a fairer and more sustainable digital market ecosystem.

He explained that before LVG was introduced, imported goods valued at RM500 and below entered the domestic market without sales tax, while local traders selling similar items bore sales tax and other operating costs.

The LVG regime now imposes a 10% tax on low-value goods purchased online from abroad, such as phone casings, socks and household items, ensuring imported and locally produced goods are treated more equitably for tax purposes.

He was responding to Ahmad Fadhli Shaari (PN-Pasir Mas), who argued that LVG effectively taxes goods commonly purchased online by B40 and M40 households while luxury products used by the T20 appear to avoid extra tax.

Amir Hamzah maintained that the current SST framework already captures selected higher-end, non-essential items and that the policy design prioritises protecting basic consumption while restoring fairness between local and foreign sellers.

On e-commerce registrations, Amir Hamzah said 493 foreign sellers are currently registered under the regime. These comprise 147 entities from the United States, 123 from Singapore, 65 from the United Kingdom and 14 from Germany, alongside others from various jurisdictions.

In terms of STODS collections by jurisdiction, Singapore accounted for the largest share at RM1.113bil, followed by Ireland at RM481mil and the United States at RM185mill.

“Collections follow the pattern of sales into Malaysia. The bigger the footprint of the digital provider, the larger the tax contribution,” he said.