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All You Need to Know About Malaysia’s Import Tax and Duties

Business

All You Need to Know About Malaysia’s Import Tax and Duties

Bordering Indonesia, Thailand, Brunei, and Singapore (via bridges) by land and Vietnam and the Philippines by sea, it is obvious how Malaysia is a strategic operating location. Malaysia continues to expand its import and export rules and regulations. But it is essential to know that complex goods-specific rules still exist, specifically how it relates to duties and taxes and how it can affect custom clearance in Malaysia.

Malaysia’s custom tariffs are typically imposed on a value-add basis, with a simple average applied tariff of 6.1% for industrial goods. Malaysia import duties and taxes for tariff lines with significant local production are often higher than those that are from other countries. As such there are different rates depending on which countries you’re importing from.

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Free Trade Agreements (FTAs)

Before importing your goods, it is helpful to know the different countries that engage in free trade with Malaysia. Malaysia is a partner to seven bilateral free trade agreements (FTAs) and seven regional FTA, including the ASEAN Free Trade Area.

Malaysia’s seven signed bilateral FTAs include  Australia, Chile, India, Japan, New Zealand, Pakistan, and Turkey. Malaysia is also a member of seven regional FTAs through the Asia Pacific These countries include  Australia, China, India, Japan, and Korea.

These FTAs allow for lower or zero customs taxes for businesses in Malaysia that wish to import or export goods. It means that these companies gain a more competitive edge in the market, while it also assists with  Malaysia’s economic sustainability.

What are some of Malaysia’s import taxes?

Effective 1 January 2010, Malaysia with five other ASEAN Member States (Brunei Darussalam, Indonesia, the Philippines, Singapore, and Thailand) became a complete free trade area. However, goods imported from other countries will be subjected to the regular import duty rates, barring any ongoing FTAs. 

Goods imported into Malaysia are subjected to Sales & Service Tax (SST)  of 10%, and these goods can be anything from food items to electronics. However, some goods are taxed at the reduced rate of 5%, while others are completely exempt from sales tax. Some food items might be subjected to an extra Malaysian Custom Excise import duty, such as a 15% tax on specific types of beverages.

What goods are exempted from import tax in Malaysia?

Here is a list of all goods that are exempted from Malaysia import tax:

  • Schedule A is for specific industries or persons, e.g., goods imported temporarily, ships spares, slight value relief for personal items, and duty-free items. 

  • Schedule B is given to manufacturers of specific goods such as price-controlled goods, pharmaceutical products, milk products, and exempt goods.

  • Schedule C is generally for registered manufacturers or agents to acquire goods free from sales tax because such goods will be used to manufacture taxable goods.

Other examples of goods that may be exempt from custom duty taxes or sales and services tariffs in Malaysia include food products like, sunflower and olive oil, as well as electronics such as laptops and mobile phones, and personal hygiene items. It is common practice for countries to reduce any additional import costs on goods that add value to the economy and meet the most basic demands of the country.

What should businesses take note of when importing to Malaysia?

While it is important to calculate and pay import taxes correctly, it is also crucial for businesses to take note of the items or goods that are prohibited. You would not want to have spent a fortune on goods that cannot be imported into the country.

The following items or goods are prohibited by Malaysia’s customs:

  • Knives and daggers

  • Goods that look like syringes

  • Indecent or pornographic material of any description

  • Counterfeit money

  • Poisonous chemicals

  • Cloth with prints or duplicates of verses from the Quran

  • Radio receivers capable of reading the ranges (68-87) MHz and (108-174) MHz

  • Anything that is unsuited with peace or is prejudicial to Malaysia’s interests

  • Sodium arsenate

  • Some forms of liquor

DHL Express has got you covered

Importing a large number of goods can be a complicated process, but it doesn’t have to be, with the right shipping company. To make importing fuss-free, it is best to get a shipping company that will cover the taxes and duties incurred on your behalf. All you will have to do is to pay according to the duty invoice that the shipping company issues to you while your goods are being sent to their destination.

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