KUALA LUMPUR, Aug 12 — The 10 per cent sales tax on all online sales for low-value goods (LVG) below RM500 should be waived until after the expected recession period next year, DAP National Chairman Lim Guan Eng said today.

He said while there is a need to create a level-playing field by imposing the same tax on local suppliers, the government should have instead waived the sales tax for local suppliers for LVG below RM500 as many purchases in the bracket are made by the lower-income households.

"In other words, the additional RM200 million in revenue for online LVG foreign purchases, and unspecified hundreds of millions of ringgit more collected from online LVG domestic purchases, will be borne by the low-income groups.

"The government should be reducing their tax burden instead of increasing them during times of imminent recession and soaring prices,” he said in a statement here.

The former finance minister added that the threat of a global recession is real as can be seen from the performance of the United States economy which is currently in technical recession over the first two quarters of 2022, and the Bank of England’s prediction the United Kingdom will be in recession in the final quarter of 2022.

He said while there is no doubt that additional taxes will not help to generate economic growth to overcome the expected recession, the government continues to express optimism that Malaysia can achieve the 2022 projected economic growth of up to 6.3 per cent.

"Even the International Monetary Fund had lowered its growth target of Malaysia to at best 5.6 per cent for 2022.

"Malaysians do not need new taxes nor any increases in interest rate when pressing economic issues resulting in high cost of living, ranging from soaring prices of food and materials, a severe labour shortage and a rapidly depreciating ringgit remain unresolved,” he said.

On July 4, the Dewan Rakyat passed the Sales Tax (Amendment) Bill 2022, which seeks to impose a flat 10 per cent sales tax on goods purchased online and delivered to Malaysia by vendors registered with the finance ministry.

The Bill was passed with a majority voice vote.

This flat rate will be imposed on low-value goods (LVG) sold online that are priced below RM500. This tax rate will be implemented next year.