Understanding Malaysian Customs
Import tariffs
Import duty is mostly imposed ad valorem, with specific duties on some items. Tariff varies considerably depending on classification. Average duties for most goods are below 10%, except transportation, metal, rubber and textile products.
Excise duties are levied on liquor, tobacco, motor vehicles and playing cards (including mahjong tiles), payable by the importer or the manufacturer as the case may be.
Sales Tax is payable on imported goods at the rates of 5%, 10% or 15% but many are exempted, depending on classification. Licensed manufacturer are eligible for exemption on raw materials and components to avoid tax cascading.
Import permit
Import restrictions are seldom imposed except for reasons of security or for protection of local industries. Import licence is required for certain prohibited goods due to public safety or standards conformance reasons.
Customs valuation
Valuation of goods for Customs purposes is largely determined in accordance with the World Trade Organization (WTO) principles. Enforcements in customs valuation compliance are on an increasing trend with focus on related party transactions.
Enforcement authority
The Royal Customs Department is responsible for the enforcement of customs and related laws, including issuance of legally binding Advance Rulings on valuation and classification matters, amongst others. Matters in dispute (e.g. product classification and valuation of goods for customs purposes) can be taken up to the Customs Appeal Tribunal.
Bonded manufacturing, free zone and merit based duty exemption
Manufacturers who export 80% or more of their finished goods can operate under bond by applying to Royal Customs Department to license the premise as a Licensed Manufacturing Warehouse (LMW) under customs laws. Import duties exemption can be claimed on pre-approved raw materials, components and machinery that are moved into the licensed manufacturing/warehouse premise. A number of Free Zones (treated as outside Malaysia for customs purposes in general) are also available for export oriented operations.
Free Trade Agreement (FTA)
Malaysia's trade landscape is altering rapidly. The growing number of free trade agreements present businesses with new opportunities as well as new challenges. Proactive steps in the areas of classification (including ASEAN Harmonized Tariff Nomenclature, AHTN) and relevant origins rules, in conjunction with effective supply chain planning would be the key to success in this changing landscape, amongst others.
At present, the FTAs in force are:
- AFTA - ASEAN Free Trade Agreement
- ASEAN-China FTA
- ASEAN-Japan
- ASEAN-Korea
- ASEAN-India (effective
- ASEAN-Australia and New Zealand
- Malaysia-Pakistan
- Malaysia-Japan
- Malaysia-New Zealand
- Malaysia-Chile (concluded 13 May 2010, to take effect in near future)
Other free trade agreements in progress include:
- Malaysia-Turkey
- Malaysia-India
- Malaysia-US
- Malaysia-Australia
- Trade Preferential Tariff Scheme for Organization Of Islamic Conference
- Developing Eight (D-8) Preferential Tariff Agreement (D-8 comprises Bangladesh, Indonesia, Iran, Malaysia, Egypt, Nigeria, Pakistan and Turkey)
Export controls
In June 2010, the Parliament passed the Strategic Trade Act 2010 (STA) to meet Malaysia’s obligations in relation to the United Nations Security Council Resolutions 1540. The Strategic Trade Act 2010 can be viewed at the Parliament website.
The law provides for control over the export, transhipment, transit and brokering of strategic items, including arms and related materials, and other activities that can facilitate the design, development and production of weapons of mass destruction (WMD) and their delivery systems.
In July 2010, the Strategic Trade Secretariat had been set up. Read more:
Implementation roadmap and updates.
Services offered
Our professional services are well customised to your company's needs. We focus on providing the best solutions to your company to achieve customs efficiency and strategic customs planning opportunities. We specialise in the following areas:
- Customs valuation - advise and planning, ruling application, dispute resolution
- Tariff classification (including AHTN) - advise and planning, ruling application
- Duty exemption - opportunities identification, application
- FTAs / preferential tariffs - monitoring, planning, certificate of origin
- Duties drawback and refunds
- Warehousing, duties deferment/suspension facilities - advise, application
- Tariff reduction lobbying
- Customs compliance reviews / "Health Checks"
- Post importation audit management and support
- Trade compliance control - policy formulation, process implementation
- Technical training
- Import and export licensing - advise, application
