TARIFF AND DUTY RATES

Types of duty

All goods dutiable on import are subject to cutoms duty in accordance with the Customs Duties Order of 1996. The types of duties are as follows:

  1. Import Duty
    The rate of import duty varies according to the type of goods imported. The rate applicable to each category of goods is indicated in Columns (4) and (5) of the “First Schedule to the Customs Duties Order of 1996.”
  2. Sales Tax
    Sales tax which is currently enforced is a single stage tax levied on certain imported and locally manufactured goods, either at the time of importation or at the time the goods are sold or otherwise disposed of by the manufacturer. It is not imposed on personal or professional services, sales of real property, or sales of intangible property. It is an ad valorem tax and current rates are as follows:
        (a) General rate on all goods (10%)

        (b) Rate on cigarette, liquor and alcoholic drink (15%)

      (c) Rate on fruits, certain food stuff and building materials (5%)

    Goods exempted from sales tax are being listed in the Sales Tax (Exemption) Order 1988.

  3. Export Duty
    Column 5 of the “First Schedule to the Customs Duties Order of 1988″ indicates the rate of export duty applicable to a particular type of goods. The word nil in column (5) appearing against any type of goods in the first schedule denotes that no export duty is leviable on that particular type of goods.
  4. Other
    Service Tax and Excise Duty; but these are domestic taxes.

Rates of Duty

The rates of duty vary according to the type of goods imported/exported.

Payment of duties

Payment of duties can be made at the prescribed offices of the Royal Customs Excise Malaysia (RCEM) during office hours after import/export declaration of goods has been approved by Customs. Duties can be paid in cash or by cheque guaranteed by banks.

Duty concessions

Royal Customs and Excise Malaysia provides concessional tariff rates for a wide range of goods in line with Malaysia’s commitment arising from the bilateral and multilateral trade negotiations with other ASEAN members. Several goods originating from other ASEAN members are eligible for admission into Malaysia at preferential rate of duty. Importers who intend to claim a preferential rate of duty must submit at the time of lodging an import entry certificate of origin (Form D) issued by a proper authority of the exporting country.

Goods imported for use as raw material in certain industries (LMW) are exempted from payment of customs duty. Individual Manufacturers may be exempted from duty on certain goods imported as raw material by the Minister of Finance under the provision of Section 14 of the Customs Act 1967. Under the Customs Duties (Exemption) Order 1980, certain goods (subject to specific rules and conditions) are exempted from payment of duty. A bona fide traveller or tourist may bring into Malaysia, without payment of customs duty personal goods and personal effect in reasonable quantities subject to specific conditions. In addition, a Malaysian who has stayed abroad or foreign nationals, who have been granted permission to take up residence in Malaysia are permitted to import used household effects duty free, subject to specific conditions.

Goods Exempted from Payment of Duty

Customs Duty Exemption is given to all raw materials/components used directly in the manufacture of approved products for export. This includes packaging materials and casings. This exemption is granted by the Minister of Finance under Section 14(2) of the Customs Act 1967 subject to certain condition.

Under the Customs Duties (Exemption) Order 1988, and Sales Tax (exemption) Order 1980 duty exemption may be granted on prescribed goods to entitled persons or organisations subject to specific rules and conditions.

Duty Free Entitlement for Bona Fide Travellers

Persons entitled to exempt are:

- Bona fide travellers, tourists or any other person entering Malaysia
- Foreign travel writers and journalists

The exemptions are given subject to the following conditions:
That the goods are imported on or with the person or in the baggage of the importer;
That the importer satisfies the proper officer of customs, that


VALUING YOUR PRODUCTS

For the purpose of determining import and export duties payable on an ad valorem basis, goods are valued in accordance with the definition of “value” under Section 2 of the Customs Act of 1967.

“Value” as defined under the act can be summarised as the price at which the goods are sold freely in the open market by the seller to any buyer not associated in business with him. As long as there is no association between the seller and buyer, the transaction value established between them will be accepted as the open market value.

However, if the seller restricts his/her sales to agents, sole distributors or associated firm then the selling prices cannot be accepted as open market value. Such prices need to be adjusted to conform with the definition of “value” in the Customs Act of 1967. The relationship between the seller and buyer is taken into consideration when a price adjustment by RECM is made. RCEM’s authority to value or assess goods, which incorporates the notion of a price adjustment, is provided under Section 13 of the Customs Act of 1967.

All enquiries regarding valuation and assessment of imported goods can be made to the Customs Headquarters in Kuala Lumpur.

Malaysia intends to implement the WTO Agreement of Customs Valuation by 1997.

CLEARING IMPORT

General information:

Written declaration is required for all dutiable and non-dutiable commercial goods to be imported. It should verify a full and true account of the number and description of packages and goods, the value, weight, and measure or quantity of all imported goods. It must also state the country of origin on the declaration form. Importer must submit the declaration form to the Customs at the place of import.

Documentation

All imported goods, both dutiable or not, must be declared in the prescribed forms and be submitted to the customs station at the place of import. The prescribed forms are the following:

  • Customs Form no. 1:
Declaration of goods imported
  • Customs Form no. 2:
Declaration of goods to be exported
  • Customs Form no. 3:
Application/ Permit to transport goods within the Federation/Malaysia
  • Customs Form no. 8:
Application/ Permit to tranship/remove goods
  • Customs Form no. 9:
Requisition/ Permit to remove dutiable goods from customs control

Supporting documents for the declaration forms are as follows:

  1. Delivery order
  2. Packing list
  3. Original invoice
  4. Bill of lading
  5. Certificate of origin
  6. Import licenses which may be required by a proper officer of customs

Customs Duty

Customs duty is based on an ad valorem rate (i.e. a percentage applied to the dutiable value of the imported goods). A flat rate of 30% ad valorem shall be levied on and paid by the importer on goods being brought in or with any person entering Malaysia, or in the baggage of such person and intended for non-commercial use (with the exception of motor vehicle, alcoholic beverages, spirit, tobacco and cigarette).


CLEARING EXPORT

General information:

Goods for export can be sent abroad by road, rail, sea or pipeline. Whether dutiable or not, goods must be presented at the place of export or another place as determined by Customs. An export declaration has to be lodged before export is permitted.

Declaration of export goods can be done by the owner, exporter, consignor or an agent authorised by the owner or exporter and approved by Customs. The declarant has to take responsibility for the submission of the Export Declaration Form (customs form no. 2) as well as for the accuracy and the completeness of its supporting documents.


Documentation

Prescribed forms for declaration of goods:

  • Non-dutiable goods of domestic origin
: Customs Form no. 2
  • Goods domestically manufactured exwarehouse (Excise Warehouse)
: For removal from Excise Warehouse, Excise Form no. 8, and on export Customs form no. 2
  • Duty paid goods on which drawback is not claimed
: Customs form no. 2
  • Duty paid goods claiming drawback under Section 93 or 99 of Customs Act 1967
: Customs form no. 2 properly incorporated with proper notice of claim
  • Imported goods from a bonded warehouse
: Customs form no. 8 for removal and export
  • Goods from licensed
: Customs form no. 2 for removal and export
  • Goods from Free Zone
: Customs form no. 2 for removal and export
  • Goods dutiable on export
: Customs form no. 2

Declaration form must also be accompanied with the following documents:

  1. Commercial invoices (export invoice)
  2. A certificate of origin of the goods
  3. Bank documents
  4. Export license, if the goods are subject to prohibition under the customs (prohibition of export) order
  5. Packing list
  6. Foreign Exchange Control Form (KPWX) if the value of exported goods is RM 100,000 and above

GOODS WITH PROHIBITIONS, CONTROLS AND RESTRICTIONS

Goods prohibited on import or export are listed under the Customs (Prohibitions) Order. Generally such goods are being categorised as absolutely or conditionally prohibited.

  1. List of Goods Absolutely Prohibited from Import

    • Any article bearing the imprint or reproduction of any currency note, bank note, or coin which are current or have at any time been issued or current in any country

    • Any emblem or device to be used in a manner prejudicial to the interest of Malaysia or to promote or foster a purpose prejudicial to or incompatible with the peace, welfare or good order in Malaysia

    • Coral, alive or dead, except those which have been processed and used as jewelry

    • All genus of piranha fish

    • Turtle eggs

    • Pens, pencils and other articles resembling syringes

    • Cocoa pods, rambutans, pulasan, longan and namnam fruits produced in the Philippines and Indonesia

    • Indecent or obscene print, painting, photography, books, cards, lithographic or other engraving, or any other indecent or obscene articles

    • Intoxicating liquors containing any lead or compound of lead of more than 3.46 milligrams per litre, whether in the form of copper or any compound of copper

    • Daggers and flick knives (switchblade knives)

    • Broadcast receivers capable of receiving radio communication within the ranges (68-87) Mhz and (108-174) Mhz except those designed to receive meteorological broadcasts at spot frequencies

    • Sodium arsenite

    • Cloth bearing the imprint of reproduction of any verses of the Koran (Qoran)

    • All goods from Haiti

    • Poisonous chemicals as listed below:

      • Crocidolite
      • Polybrominated biphenyls
      • Polychlorinated biphenyls
      • Polychlorinated terpheuenyls
      • Tris (2,3 dibrimopropyl) phosphate
  2. List of Prohibited Goods that are Prohibited from Importation Unless Accompanied by an Import License

    • Diamonds and diamond-set jewelry (other than a reasonable quantity of articles of personal jewelry imported as part of the personal baggage of a person arriving into Malaysia from a place outside the country and intended solely for personal use by that person)

    • Eggs in the shell

    • Meat, fresh or preserved, bones, hide, skin, hooves, horns, offal of any animal or any portion thereof

    • Poultry

    • Animals (live) – primates, including apes, monkeys, lemurs, galagos, pottos, etc.

    • Explosives

    • Fireworks (including firecrackers)

    • Imitation arms including toy guns and toy pistols

    • Imitation hand grenades

    • Arms and ammunition other than personal arms and ammunition imported by a bona fide traveller

    • Bullet-proof vests, steel helmets and other articles of clothing used as protection against attack

    • Soil and pests which include live insects, rats, snails and cultures of plant disease causing organisms

    • Safety helmets (except as worn by motorcyclists or motorcycle pillion riders)

    • Video machines, excluding game wathces and video games for use with a television receiver

    • Motor vehicles

    • Cabbages (round)

    • Batik sarong

    • Rice and padi including rice fluor, rice polishing, rice bran and rice vermicelli

    • Wood in the rough

    • Single colour copying machines

    • All goods from Israel

    • Parabolic antenna for outdoor use

    • Coin or disc operated amusement machines

    • Parabolic equipment, antenna port and accessories for satellite receiver, video plexer, antenna positioner

    • Electrical apparatus for domestic use such as Hi-Fi sets, electric smoothing irons, food mixers, hair dryers, rice cookers, televisions, electric kettles, etc.

    • Radio communications apparatus

    • High speed duplicator

  3. List of Goods that are Absolutely Prohibited from Export

    • Turtle eggs

    • Rattan from West Malaysia only

    • Petroleum and petroleum products, arms and related materials of all types including weapons and ammunition, military vehicles and equipments, police equipment and spare parts for the above mentioned.

  4. List of Goods that are Prohibited from Exportation Unless Accompanied by an Export Licenses

    • All goods from Israel

    • Any animal or bird, other than a domestic animal or domestic fowl, whether dead or alive or any part thereof, including all animals and birds specified in any written law in Malaysia

    • Sugar

    • Live animals of bovine species; poultry

    • Rice and padi

    • Meat of bovine animals

    • Cockles

    • Eggs

    • Pineapple slips

    • Eggs of poultry

    • Skins and other parts of birds

    • Minerals and ores of all kind

    • Plants including orchids

    • Live prawns/shrimps

    • Coral alive or dead

    • Antiquities

    • Arms and ammunition

    • Oil palms

    • Live fish

    • Milk and milk products

    • Military clothing and equipment

    • Textile

    • Waste paper and paper board

    • Logs, sawn timber, molding, plywood, veneer chip

    • Vegetables (fresh, chilled or frozen) in excess of 3 kilograms per consignment

    • Bricks

    • Palm kernels and palm seeds

    • Clonal rubber seeds

    • All goods to Israel

    • Military clothing and equipment

    • Scraps and other waste of iron copper, lead, zinc, tin, aluminum, steel and magnesium

    • Roofing tile

    • Billets of iron, bars and rod of iron

    • Star fruits

TEMPORARY ADMISSION

Section 97 of the Customs Act of 1967 provides for the Director-General of Customs to allow goods to be temporarily imported into Malaysia without payment of duty subject to furnishing a security normally in the form of banker’s guarantee equivalent to not less than the amount of duty which would be payable if the goods were imported for home consumption.

Items 21, 21A, 52, 58, 65, 114, 118 and 119 of the Customs Duties (Exemption) Order of 1988″ and Items 21, 29, 56, 62, 71, 73, 82, 94, 95, and 96 of “Schedule B, Sales Tax (Exemption) of 1980″ are also pertaining to the exemption of customs duty and sales tax on temporary imported goods.

Applications for temporary importations should be forwarded to the State Customs Director at the station of importation. Approval for temporary importation is given for a three month period. Extension for temporary importations will be allowed only under certain circumstances. Application for further extension has to be submitted to the station that has given approval for temporary importation.

Jewelry items for exhibition are also entitled to the temporary importation facilities, subject to the following conditions:

  • The exhibition should be held in the “Customs Bonded Area”

  • The exhibitor should furnish security (bank guarantee) where the amount equivalent to two times of duty payable

RCEM only accepts guarantee letters issued by local banks for temporary importations.

ATA Carnet

Malaysia has acceded to the ATA Carnet convention. Items covered by the ATA Carnet convention. Items Covered by ATA Carnet System are:

  • Commercial samples and advertising film

  • Goods for International Exhibition

  • Professional Equipments

Items excluded from the ATA Carnet System are the following:

  • Items already sold or offered for sale

  • Theatrical make up, etc.

  • Alcoholic beverages, tobacco and fuels, etc.

  • Goods intended for processing or repair

The validity of carnets extends for 12 months from the date of issue for commercial samples, exhibition goods and professional equipment. If the validity period is exceeded, duty and penalty charges will be incurred, despite proof that the goods were eventually re-exported. Any such charges incurred will be the liability of the ATA Carnet holder.

Goods imported under ATA Carnet must be re-exported within the period approved for their admission. They are not to be sold or transferred. Failure to observe these would result in the ATA Carnet Holder to guarantor liable to the payment of duty and penalty charges. ATA Carnet application should be made to the following authority:

Malaysia International Chamber of Commerce and Industry (MICCI)
Tingkat 10
Wisma Damansara 
Jalan Samanthan
50490 Kuala Lumpur
Malaysia

OBTAINING REFUNDS/DRAWBACK ON YOUR DUTY PAYMENT

Duty drawback for Malaysia involves two stages, they are:

  1. Application for duty/tax drawback facility.

  2. Claims for duty/tax drawback.

Section 93 of the Customs Act of 1976 provides for drawback of 90% of the customs duties paid on goods which are imported and the re-exported subject to certain conditions.

Under the provisions of Section 99 of the Customs Act of the 1997, the Directors-General of Customs may authorise up to 100% duty drawback on goods imported for further manufacture and re-exported at a latter time. Those goods subject to 100% duty drawback are shown in the Third Schedule of the Customs Regulations of 1977.

In order to be eligible for duty drawback, the following conditions must be met:

  1. The goods exported must have been manufactured in premises approved by the Director-General of Customs

  2. Proper books of accounts are kept in respect of the use of raw materials and component parts in the manufacture

  3. The raw materials and component parts are imported by the manufacturer and exported as part of the finished goods within twelve months of the date upon which duty/tax was paid

  4. The manufacturing process must conform to the definition of “manufacture” in the Customs Act of 1967

  5. The manufacturing process must conform to the definition of “manufacture” in the Sales Tax Act of 1972

  6. Claims should be made on the prescribed forms: JKED no. 2 (Duty Drawback Claim Form) and Sales Tax Form no. 3 or 8.

All of these forms should be supported with copies of both customs Forms 1 (Import) and 2 (Export).

Verification of drawback facilities will be done after the drawback has been paid, and will be conducted by senior officers of Customs. Manufacturers are expected to cooperate fully with RCEM during this verification.

LICENSED/BONDED WAREHOUSE

In Malaysia, Manufacturing Bonded Warehouse is known as Licensed Manufacturing Warehouse (LMW) established under the provision of section 65/65A of the Customs Act 1967.

LMW is a type of bonded warehouse where the manufacturing process is allowed to be carried out to produce finished goods for export. Manufacturing operation therein is subject to minimal customs procedures. It is primarily intended to cater for export oriented industries.

Customs duty exemption is given to all raw materials and components used directly in the manufacturing process of approved produce from the initial stage of manufacturing until the finished product is finally packed ready for export. This includes packing materials and casings.

The list of raw materials/components that can be imported and taken to a licensed manufacturing warehouse without payments of customs duty is issued together with the licensed manufacturing warehouse license.

Goods subject to excise duty incorporated in the final product may be exempted from excise duty. Application for such excise duty exemption should be made to the Treasury for consideration.

Machinery equipment required for direct manufacturing process of approved final products are entitled to exemption from customs duty and sales tax.

Generally, licensed manufacturing warehouse are documentarily controlled by the customs. As such, customs officers will not be stationed at the licensed premises.

Manufacturing process can be carried out without any time limit, but no dutiable goods shall be brought in or taken out of the licensed premises outside the normal opening hours without written permission from customs authority.

In the case of goods for export, the license or his agent is required to submit Customs Form no. 8 duly completed to the officer of customs in charge of the licensed manufacturing warehouse concerned.

Finished goods specifically permitted to be sold in the domestic market, will be released from the licensed manufacturing warehouse on payment of whatever customs duty and sales tax leviable thereon, unless so exempted by the Minister of Finance. Goods to be released for domestic market, must be declared on Customs Form no. 9 for payment of duty.

Other than manufacturing activities, Free Industrial Zone’s Company are also allowed to operate procurement activity in Free Industrial Zone upon approval granted by Ministry of International Trade and Industry (MITI) under International Centre Incentive Scheme.

CLEARANCE FOR PASSENGER

Bona fide travellers or visitors may bring goods or used portable personal effects into Malaysia duty free. Personal effects are items which a traveller needs for his/her personal use during a journey, such as cigarettes, perfumes and wearing apparels but excluding any goods imported for commercial used. Articles for personal used or consumption by travellers are considered non-commercial unless their nature or quantity suggests otherwise.

Used portable personal effects qualify for customs duty exemption only if:

  1. The articles are imported on the visitor’s person or in his baggage

  2. The articles have been in his regular and private use for a required length of time

  3. The articles are imported for his regular and private use

The travellers or visitors may import the following goods duty-free if they satisfy certain conditions:

  • Wine, spirits or malt liquor not exceeding one litre in all;

  • Tobacco not exceeding 225 grams (equivalent to 200 cigarettes);

  • Matches not exceeding 100 sticks;

  • Cosmetics, perfumery, soaps and dentifrices in one containers to a total value not exceeding RM 200;

  • Wearing apparels not exceeding 3 pieces;

  • Footwear not exceeding one pair;

  • Portable electrically and battery operated appliances for personal care and hygiene not exceeding one unit each;

  • Dutiable foods preparation to a total value not exceeding RM 75;

  • Gifts and souvenirs to a value of RM 700. If the gift and souvenirs are imported from Labuan or Pulau Langkawi then the total value allowed under this exemption is RM 500.

Travellers or visitors in possession of dutiable goods for personal use which are not exempted from customs duties may deposit with customs the amount equivalent tot he customs duties payable on such goods. Such deposits refundable upon travellers’ or visitors’ departure of the country, provided that the goods are re-exported within three months from the date of importation. The goods are required to be produced at the time of departure to the customs officer on duty at the point of exit together with the deposit receipt. The deposit can be collected from any exit point.

Travellers or visitors may purchase duty-free items from duty-free shops at the airports but the quantity is restricted to the duty free allowance that they are entitled to. When buying at other duty free shops outside the airport (down towns), visitors or travellers need to produce their passport and other travel documents. The goods can only be claimed at the departure counter at the airport by producing the relevant vouchers.