In an announcement on its website, the customs department said the implementation of the tax had been postponed “to a date to be determined later”.

The 10% sales tax was scheduled to be imposed on goods purchased online and delivered to Malaysia by vendors registered with the finance ministry. It is applicable to items priced below RM500.

The decision to impose the tax comes after the Dewan Rakyat passed the Sales Tax (Amendment) Bill 2022 in August last year.

Former deputy finance minister Shahar Abdullah said the government was expected to collect RM200 million per year from the implementation of the tax.

He added that the tax would level the playing field between online sellers both inside and outside Malaysia, which would empower local markets and businessmen.

The tax was first mooted by former finance minister Tengku Zafrul Aziz when tabling Budget 2022.

Tengku Zafrul said the tax on online purchases would “level the playing field” for locally manufactured goods.