Other Duties

Import duties

1.   Rates of duties

Import duties are levied on goods that are subject to import duties and imported into the country. Import duties are generally levied on an ad valorem basis but may also be imposed on a specific basis. The ad valorem rates of import duties defined in terms of a fixed percentage of value ranging 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

Effective 1 April 2008, Malaysia implemented tariff rate quota (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. Imports within quota (volume) attract duties at a lower tariff rate while a higher tariff rate applies on goods in excess of the quota volume “out-quota tariff rate”. The quota applicable is determined by the relevant agency, e.g. Department of Veterinary Services.

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.

Approval is subject to Confirmation of “Local Non-Availability” and “Directly Used in Manufacturing” rules.

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

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.

Categories of goods requiring an import licence / permit from relevant authorities into Malaysia include, but are not limited to:

  • Certain food products, medical devices, pharmaceuticals and cosmetics
  • Certain electrical operated machinery
  • Motor vehicles for the transport of persons, goods or materials
  • Motor cycles, auto-cycles and cycles fitted with an auxiliary motor
  • 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
  • Polymers of ethylene and propylene in primary forms
  • Heavy machineries
  • Petroleum
  • Rags, plastics, papers or filters contaminated with scheduled wastes
  • Chlorofluorocarbons (CFCs)
  • Telecommunications equipment
  • Tobacco products, alcoholic beverages
  • Radioactive / nuclear materials / prescribed substances
  • Imitation arms, toy gun, hand grenades, toy grenades
  • Arms and ammunition
  • Bullet proof vests, steel helmets and other articles of clothing intended as protection against attack or explosives


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
  • Military clothing and equipment
  • 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

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

 

Export duties

Export duties are generally imposed on the country’s main commodities such as crude petroleum and palm oil for revenue purposes.

 

Excise duties

1.   Basis of taxation

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

2.   Rates of duties

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

In addition, it is proposed that from 1 April 2019 that an excise duty rate of RM0.40 per litre be charged on specified sugar-sweetened beverages.

3.   Excise licensing

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

A warehouse licence is required for storage of goods subject to excise duty.

However, a licence to manufacture tobacco, intoxicating liquor or goods subject to excise duty also permits the holder to store such goods.

4.   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 transport of persons is not payable until the vehicles are registered with the Road Transport Department, provided that a security is provided (up to maximum of 4 years from the date of removal from the place of manufacture).

5.   Exports

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

 

Licensed Manufacturing Warehouse

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.

With effect from 1 September 2018, GST has been abolished and replaced by the Sales Tax and Services Tax.

 

Free Zone

A free zone is deemed to be a place outside Malaysia for customs purposes. Subject to certain exclusions, goods and services can be brought into, produced or provided in a free zone without payment of customs duty or excise duty.

Free Zone is an area that is considered outside Malaysia as provided under Section 2 of the Customs Act 1967, Section 2 of the Excise Act 1976. There are two types of Free Zones in Malaysia: (a) Free Industrial Zone (FIZ) and (b) Free Commercial Zone (FCZ). Manufacturing activities are allowed to be conducted in FIZ while trade activities are allowed to be conducted in FCZ.

 

Free Trade Agreements

Malaysia has concluded several regional and bilateral free trade agreements and several more are still under negotiation. One of the key features of free trade agreements is the preferential tariff treatment accorded to member countries. Currently, the following free trade agreements are in force:

  • ASEAN Trade in Goods Agreement
  • ASEAN-China Free Trade Agreement
  • ASEAN-Korea Free Trade Agreement
  • ASEAN-Australia-New Zealand Free Trade Agreement
  • ASEAN-Japan Comprehensive Economic Partnership Agreement
  • ASEAN-India Trade in Goods Agreement
  • Preferential Trade Agreement Amongst D-8 Member States
  • Malaysia-Pakistan Closer Economic Partnership Agreement
  • Malaysia-Japan Economic Partnership Agreement
  • Malaysia-Chile Free Trade Agreement
  • Malaysia-India Comprehensive Economic Cooperation Agreement
  • Malaysia-New Zealand Free Trade Agreement
  • Malaysia-Australia Free Trade Agreement
  • Malaysia-Turkey Free Trade Agreement

The preferential tariff treatment and the rules of origin may vary from one free trade agreement to another.

Contact us

PwC Malaysia

General enquiries, PwC Malaysia

Tel: +60 (3) 2173 1188

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