Shopee seller tax Malaysia: what you must declare

Do Shopee and TikTok Shop sellers pay income tax in Malaysia?

Yes. LHDN applies the same tax rules to online and offline business. Its own e-commerce guidelines call this the principle of neutrality: selling phone cases from a shoplot and selling them from your bedroom through Shopee are the same thing to the taxman. LHDN's list of taxable business income specifically includes online businesses, so a regular seller is running a business, whether or not it feels like one.

There is also no minimum sales figure before business income must be declared. Employment income has a registration threshold, but business income does not. Even a seller who made a loss should still register a tax file and report the numbers. That sounds harsh, but it works in your favour: declared losses and expenses are what keep your tax bill down later.

Can LHDN see my Shopee sales?

Assume yes. In March 2025, LHDN announced it had identified about 66,000 businesses selling on e-commerce platforms that were not complying with instalment payment rules, with no record of filing tax returns at all. It found them through e-Invoice data, since platforms have been feeding transaction details into the MyInvois system since August 2024. Those 66,000 sellers had issued four million e-invoices between them (The Star, 4 March 2025).

In other words, LHDN found tens of thousands of sellers before those sellers ever found the Form B page. The platforms are large companies sitting fully inside the e-Invoice system, and LHDN openly says it monitors this data. Declaring properly is not just the legal route, it is now the only realistic one.

Is my online selling a business or just a hobby?

Selling regularly with the aim of making a profit is a business. Clearing out your own wardrobe or selling your old PS5 is not, because you are disposing of personal belongings, usually at a loss. The practical markers LHDN cares about: you buy or make stock to resell, you sell repeatedly rather than once or twice, you promote your listings, and you price to profit.

So a one-time Carousell declutter does not make you a taxpayer with business income. Restocking viral TikTok gadgets every fortnight does. If you are somewhere in between, ask yourself the honest question: am I trying to make money from this regularly? If yes, treat it as a business, register a tax file on MyTax (e-Daftar) if you do not have one, and start keeping records now. Registering with SSM is a separate legal matter under the Companies Commission; LHDN taxes your profit either way.

Am I taxed on my sales or my profit?

On your profit. This is the single most important thing for a seller to understand, and it is also where most sellers trip. You declare your gross sales (what buyers actually paid), then deduct your business expenses, and only the balance is taxed.

The trap: your bank account only ever sees the net payout, after Shopee or TikTok has already deducted commission, transaction fees and shipping adjustments. Your revenue for tax is not your payout. It is the gross sales figure in your Seller Centre reports, with the platform's cuts claimed separately as expenses. Declaring the payout figure and then claiming fees again would double-count the deduction, and understate your income. Pull your monthly income statements from Seller Centre, do not reconstruct your business from bank statements.

What expenses can an online seller claim?

Anything wholly and exclusively spent to earn the sales, per Section 33 of the Income Tax Act. For a marketplace seller that typically means:

• Platform commission, transaction and service fees (the cut Shopee, TikTok Shop or Lazada takes)
• Cost of stock you sold (what you paid suppliers for the products)
• Packaging, boxes, bubble wrap and postage top-ups you paid yourself
• Paid ads (Shopee Ads, TikTok promotions, Facebook or Instagram ads)
• Delivery and fuel for sourcing trips or drop-offs, the business portion
• A fair business portion of phone and internet bills, and home office costs like a share of electricity

Personal spending is blocked by Section 39, so no smuggling in your holiday because you "answered chats" at the beach. Mixed-use items get a fair split, claim the business percentage only.

Equipment gets separate treatment. Small items costing RM2,000 or less each (a ring light, a phone stand, a label printer) can usually be claimed 100% in the year of purchase as a small-value asset, up to RM20,000 of such claims a year. Bigger assets like a laptop are claimed over a few years through capital allowances instead. Our sole proprietor tax guide covers the mechanics in more detail.

Which tax form do online sellers file, and when?

Form B, the return for individuals with business income. You file it on MyTax as e-B. For income earned in 2025 (YA 2025), the paper deadline was 30 June 2026 and the e-Filing grace deadline is 15 July 2026. Miss that and late-filing penalties apply, see our LHDN fines guide.

Two things catch sellers out. First, if you have a day job plus your Shopee shop, you do not file the employee form (Form BE) anymore. Business income moves you to Form B, and your salary goes in the same form. Our side income guide walks through that switch. Second, once you are in the system LHDN may start sending CP500 instalment notices, a pay-as-you-go schedule for business income. Do not ignore them; they can be revised in-season (Form CP502) if the estimate is too high.

Worked example: RM95,000 in Shopee sales

Meet Aina, who sells phone accessories on Shopee and TikTok Shop as her full-time gig. In 2025 her Seller Centre reports show RM95,000 in gross sales. Her records: RM11,000 in platform commission and fees, RM38,000 of stock purchased and sold, RM4,500 on packaging and postage, and RM1,500 of small equipment (ring light, label printer). Her bank only received about RM84,000 in payouts, but her declared revenue is RM95,000, with the RM11,000 in fees claimed as an expense. All figures are computed the way the MyTaxMate engine does it, on the YA 2025 rates (identical for YA 2026).

With records (the right way). Profit is RM95,000 minus RM11,000 minus RM38,000 minus RM4,500 = RM41,500. The RM1,500 of small equipment is claimed 100% as a small-value asset, bringing her business income to RM40,000. She claims the automatic RM9,000 individual relief plus RM3,000 she put into EPF i-Saraan, so her chargeable income is RM28,000. Tax on that is RM150 on the first RM20,000 plus 3% on the next RM8,000 (RM240), which is RM390. Because her chargeable income is RM35,000 or below, the RM400 rebate wipes it out. Tax payable: RM0.

With no records (the expensive way). LHDN sees RM95,000 of platform sales. Aina cannot prove her costs, so effectively the whole RM95,000 is treated as profit. After the RM9,000 relief, chargeable income is RM86,000. The bracket walk: RM150 + RM450 + RM900 + RM2,200 + RM3,040 = RM6,740.

Same shop, same year, same sales. The difference between RM0 and RM6,740 is a folder of supplier invoices and Seller Centre statements. Records are not admin, they are money.

What records do I need to keep, and for how long?

Seven years, required by Section 82A of the Income Tax Act. For a marketplace seller the practical set is: monthly Seller Centre income statements (gross sales, fees, adjustments), supplier invoices and receipts for stock, postage and packaging receipts, ad spend receipts, and statements for the bank account that receives payouts. If you claim a portion of phone, internet or electricity, keep those bills too.

A bank statement alone is not enough, because it shows payouts, not sales, and proves nothing about your costs. If LHDN ever audits, the seller with a tidy folder gets a boring afternoon. The seller with no records gets taxed on gross, like Aina's second scenario above.

Do small sellers need to issue e-invoices?

Most do not. Under LHDN's implementation timeline (updated 7 December 2025), taxpayers with annual turnover or revenue below RM1,000,000 are exempt from implementing e-Invoice. If your shop turns over less than RM1 million a year, you are not required to issue e-invoices yourself, though you can volunteer.

Do not confuse your exemption with invisibility, though. The platforms you sell through are already inside the e-Invoice system, which is exactly how LHDN spotted those 66,000 sellers. If your revenue is approaching RM1 million, check LHDN's e-Invoice guidelines for when your own obligation starts.

What if I never declared my online income before?

Start now, and declare this year properly. LHDN consistently treats people who come forward voluntarily more leniently than people it has to find, and as the 66,000-seller sweep shows, it is actively looking. Register your tax file on MyTax if you have not, file the current year on time, and keep records from today onwards.

If you have several undeclared years and meaningful money involved, it is worth a session with a licensed tax agent before you file anything, so back years are handled deliberately rather than by hoping. Penalties for late filing and underdeclaring scale with how long you wait, our fines guide shows the actual numbers.