2023/2024 Malaysian Tax Booklet

Import duties

1. Scope and rates 

Import duties are levied on dutiable goods imported into the country, generally on an ad valorem basis but may also be imposed on a specific basis. The ad valorem rates range from 0% to 60%. Raw materials, machinery, essential foodstuffs and pharmaceutical products are generally non-dutiable or subject to duties at lower rates. 

2. Tariff rate quota (TRQ)

Malaysia applies TRQ on selected agricultural products, such as chicken, milk and cream, hen eggs, cabbages. Under TRQ, the tariff charged depends on the volume of imports (“the quota”) which is determined by the relevant government agencies. Lower tariff applies to within quota imports and higher tariff for imports exceeding the quota. 

3. Value of goods

The value of goods for the purpose of computing import duties is determined largely in accordance with the World Trade Organisation principles of customs valuation.

4. Exemptions

There is a range of duty exemptions on specific goods that prescribed persons are eligible to claim, subject to prescribed conditions under an Order made by the Minister. In addition, manufacturers are eligible to apply for merit-based duty exemptions on:

• raw materials and components used directly for the manufacture of goods for export and domestic markets.

• dutiable machinery and equipment which are used directly in the manufacturing process.

Manufacturers are required to apply to the relevant authorities for exemption. For example, Malaysian Investment Development Authority and Royal Malaysian Customs Department.

Import duty exemption is to be granted for nicotine gum and nicotine patches used in Nicotine Replacement Therapy for a period of 3 years for applications from 1 April 2023 to 31 March 2026.

W.e.f 1 January 2024, it is proposed that exemptions from import duty and sales tax be given to qualified manufacturers on the importation and local purchase of manufacturing aids subject to the type of industry and the specified category of goods.

Exemptions for carbon capture and storage - refer to “Tax Incentives” chapter.

5. Prohibition of imports

Import restrictions are imposed on a range of products for protection of local industries or for reasons of security and public safety. An import licence has to be obtained for the importation of prohibited goods, unless otherwise exempted. Examples of goods requiring an import licence / permit from relevant authorities into Malaysia include:

• Certain food products (such as rice), medical devices, cooking appliances, pharmaceuticals and cosmetics

• Certain electrical operated machinery 

• Motor vehicles for the transport of persons, goods or materials

• Used televisions including video or visual display with TV tuner, used air conditioners, used personal computers and used mobile phones

• Billets of iron or steel 

• Alloy steel and high carbon steel 

• Stranded wire, cables, cordage, ropes, plaited bands and the like of aluminium wire

• Natural or synthetic rubber insulated or plastics insulated electric wire, cable, bars and strip and the like, whether or not fitted with connectors 

• Heavy machineries
  

• Petroleum

• Rags, plastics, papers or filters contaminated with scheduled wastes

• Chlorofluorocarbons (CFCs) and Hydrofluorocarbons (HFCs)

• Telecommunications equipment

• Tobacco products, alcoholic beverages

• Radioactive / nuclear materials / prescribed substances

• Arms and ammunition 
  

• Motor vehicles parts
  

• Waste and scrap of paper, paperboard and metal

6. Prohibition of exports

Export restrictions are seldom imposed except on a limited range of products for reasons of security and public safety. An export licence has to be obtained for the exportation of prohibited goods. 

Categories of goods requiring an export licence include, but are not limited to:

• Cement clinker 

• Portland cement 

• Slags, dross, scaling and similar waste of iron and steel, zinc, nickel, copper, lead, aluminium 
  

• Tin slag and hardhead of tin 

• Zinc dust and sludge form 

• Used televisions including video or visual display with TV tuner, used air conditioners, used personal computers and used mobile phones

• Hydrofluorocarbons (HFCs)

• Face masks

• Rice

Import and export licence applications may be submitted electronically via DagangNet (e-Permit) or manually to the relevant licence / permit processing authority.

Excise duties

1.  Scope and rate

Excise duties are imposed on a selected range of goods manufactured in Malaysia or imported into Malaysia. These include beer / stout, cider and perry, rice wine, mead, indentured ethyl alcohol, brandy, whisky, rum and tafia, gin, cigarettes containing tobacco, electronic cigarette and electronic vaporising device, motor vehicles, motorcycles, playing cards and mah-jong tiles.

The rates of excise duties vary from a composite rate ranging from RM1.10 per litre and 15% for certain types of spirituous beverages, RM0.40 per stick for cigarettes, to as much as 105% for motorcars (depending on engine capacity). 

Currently, specified sugar-sweetened beverages under HS heading 20.09 and 22.02 are subject to an excise duty rate of RM0.40 per litre. W.e.f 1 January 2024, it is proposed that the excise duty will increase to RM0.50 per litre.

Pre-mixed preparations of chocolate or cocoa-based, malt, coffee and tea such as 2-in-1 or 3-in-1 pre-mixed beverages are subject to an excise duty of RM0.47 per 100 grams. The effective date is yet to be determined.

Liquid or gel containing nicotine used in electronic cigarettes and vape are subject to an excise duty of RM0.40 per litre. The implementation date to increase the excise duty for nicotine-free liquids or gels used in electronic cigarettes and vape from RM0.40 per millilitre to RM1.20 per millilitre is yet to be announced.

W.e.f 1 January 2024, it is proposed that chewing tobacco under HS 2403.99.50 00 will be subject to excise duty rate of 5% and RM27 per kilogram.

2. Specific exemptions for electric vehicles (EV)

• From 1 January 2022 to 31 December 2027, full import duty exemption on components are granted for Completely Knocked Down (CKD) EVs and full excise duty and sales tax exemption are granted for CKD EVs. 
• W.e.f 1 January 2022 to 31 December 2025, full import duty and excise duty exemption will also be given to Completely Built Up (CBU) EVs.

3. Specific exemption for individually owned taxis and hired cars

Full sales tax and excise duty exemption is to be granted on the sale / transfer / private use / disposal of budget taxis, executive taxis, Teksi 1 Malaysia, airport taxis (budget and family), and hired cars, which have been held for at least 5 years from the registration date.

4. Studio and filming production equipment

Sales tax and import duty exemptions on studio and filming production equipment will be given to providers of equipment and production services including post-production, studio and cinema for a period of 3 years. Applications to be received by the Ministry of Finance from 1 April 2023 until 31 March 2026.

5. Excise licensing

• Unless exempted from licensing, a manufacturer of tobacco, intoxicating liquor, sweetened beverages or goods subject to excise duties must have a licence to manufacture such goods.

• The licence to manufacture also permits the holder to store such goods, otherwise a warehouse licence is required for storage of goods subject to excise duty.

6. Payment of duty

As a general rule, duty is payable at the time the goods leave the place of manufacture. However, excise duty on a predefined list of motor vehicles for the transport of persons is not payable until the vehicles are removed from the place of manufacture for registration with the Road Transport Department, provided that a security is given (up to a maximum of 4 years from the date of removal from the place of manufacture).

7. Exports

No excise duty is payable on dutiable goods that are exported.

Licensed Manufacturing Warehouse (LMW)

Manufacturers who export 80% or more of their finished products can apply for LMW status. Raw materials, components and machinery used in the manufacturing process are generally exempted from import duties and sales tax.

Authorised Economic Operator (AEO) 

Currently, the AEO status is given to eligible manufacturers, operators (including warehouse operators), traders and logistics service providers. An AEO is a person who is involved in import and export activities and, having been “certified” to be compliant in its customs related operations, is entitled to enjoy benefits provided in the AEO program. 

Windfall Profit Levy

Windfall Profit Levy is levied on Crude Palm Oil (CPO) producers. A 3% levy rate is imposed on the CPO threshold value of RM3,000 per metric ton for Peninsular Malaysia and RM3,500 per metric ton for Sabah and Sarawak.