Malaysia and Australia have a strong bilateral relationship, with multiple trade agreements signed between the two countries. For example, this includes the Malaysia-Australia Free Trade Agreement (MAFTA) and the ASEAN-Australia-New Zealand FTA (AANZFTA).
These strong trade agreements make Australia a lucrative market for businesses looking to expand. However, to navigate this opportunity effectively, it's essential to understand Australia's import duties and taxes.
Types of import duties and taxes in Australia
Australia primarily charges 2 types of duties and taxes on all import shipments — customs duties and goods and service tax (GST).
Customs duties
Customs Duties with a standard rate of 5% are levied on all goods imported into Australia valued above AUD 1000, and for those that do not meet the Rules of Origin (ROO) under the Malaysia-Australia Free Trade Agreement.
Do note that Australia exempts almost all Malaysian-originating goods from customs duty except goods such as alcohol, tobacco and biodiesel — per the Malaysia-Australia Free Trade Agreement.
Goods and services tax (GST)
Australia levies GST on all imported goods into the country above AUD 1000. Additionally, Australia applies a standard GST rate of 10% on the CIF value of imports.
Calculating duties and taxes in Australia
All Malaysian shipments entering Australia are subject to customs duty and Goods and Services Tax (GST).
However, both duties have a slight difference in their calculations. Knowing how Australian customs calculate customs duty and tax is essential, to ensure how much you are charged for your imports is accurate.
Calculating customs duty in Australia
To calculate customs duty, you must first identify the HS code for your goods. You can do this by checking the official website of the Australian customs authority, or by using DHL's HS code searcher.
Once you identify the HS codes for your goods, you can find the tariff rates applicable.
Example of customs duty calculation
Imagine you're shipping cigarettes to Australia, with each stick containing less than 0.8 grams of tobacco.
Since cigarettes containing tobacco have a specific formula to calculate customs duty, we need to know the amount of cigarette sticks imported. Let’s assume 2,000 cigarette sticks are imported.
2000 cigarette sticks x AUD 1.16435 = AUD 2,328.7
Hence, the customs duty for 2000 cigarette sticks is AUD 2,328.7
Whether you are an established enterprise, or want to start a business in Malaysia with Australia as one of your key global target markets, rest assured that its booming economy, strong governance and stability will translate to positive returns.
To better understand Australia's import tax and duties, let’s take a deeper dive below.
How much is import duty in Australia?
Australia typically charges a 5% import or customs duty of the value of goods when converted to Australian dollars. However, with the MAFTA, Malaysian businesses do not need to pay any import duty. However, this is subject to fulfilling the Rules of Origin (ROO) criteria set out in the agreement.
Which goods are subject to 0% customs duty in Australia under the MAFTA?
To avoid paying import tax in Australia when shipping goods from Malaysia, your product must be deemed an originating good. You can enjoy 0% import duty under the MAFTA as long as your goods are:
- Completely produced in Malaysia
- Produced exclusively from originating materials in Malaysia
- Satisfies provisions set out by the Product Specific Rules
Any good that does not meet the Product Specific Rules can still be classified as an originating good and enjoy preferential rates of import fees in Australia if the:
- Value of the non-originating materials used to produce the good did not exceed 10% of Free on Board (FOB) value of the good.
- Weight of all non-originating materials used to produce the good did not exceed 10% of the total weight of the good. This only applies to goods under the Chapters 50 to 63 of the Harmonised Commodity Description and Coding System (HS).
What documents must I produce to enjoy 0% import tax and duty in Australia?
The MAFTA requires that you support your claims for originating goods with a Certificate of Origin, issued by the Malaysian Ministry of International Trade and Industry. At any time, the Malaysian government may waive the requirement of the Certificate of Origin for Malaysian businesses exporting to Australia, and replace it with the Declaration of Origin. Both documents are valid for one year.
In addition to the above, the Australian authorities will require the following documents for customs clearance:
- Airway bill
- Commercial invoice
- Packing list
- Insurance policy (if applicable)
- Other permits and licenses where relevant
Do I need to pay GST when importing goods from Malaysia to Australia?
According to the Australian Border Force, a 10% GST is payable on all taxable goods being imported into Australia unless there is a customs duty concession or GST exemption, in pursuant to Australia’s legislation.
While the 0% import duty may be interpreted as a customs duty concession, the MAFTA does not explicitly detail the provisions of GST. You are advised to get in touch with your legal or compliance counsel for advice on GST matters when shipping goods from Malaysia to Australia.
When planning your shipments from Malaysia to Australia, engaging a reliable delivery partner lets you easily plan all customs clearance procedures, from shipment consolidation to single customs clearance.
Staying abreast of recent trade developments is important when doing business beyond geographical borders — an experienced logistics provider will offer quotes that best suit your needs against market conditions.
Create a DHL Express business account with us and read more tips on shipping overseas, especially helpful for Malaysian small and medium enterprises.
Alternatively, to find out more about tax procedures in other countries, such as the UK import tax, import duties in Vietnam or more, contact DHL’s customer care team today.
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