Malaysia: Self-Declaration Mechanism for Tax Exemption

The implementation of the new self-declaration mechanism through Customs Duties (Exemption) Order 2013 and Sales Tax (Exemption) Order 2013 took effect on 2nd May 2014. Companies would be able to obtain the permission within a period of two (2) weeks from the date of submission to Customs. 

The key areas of the exemptions are: 

Manufacturers in the Principal Customs Area, PCA 

1. Import duty exemption on machinery and equipment excluding spare parts and consumables imported or purchased from a Licensed Manufacturing Warehouse, Bonded Warehouse or Free Zone under item 115 Part 1, Schedule of the Customs Duties (Exemption) Order 2013 

2. Sales tax exemption on machinery, equipment, spare parts and consumables imported or purchased from a Licensed Manufacturing Warehouse, Bonded Warehouse or Free Zone under item 106, Schedule B of the Sales Tax (Exemption) Order 2013 

3. Sales tax exemption on machinery, equipment, spare parts and consumables purchased from a manufacturer (licensed under the Sales Tax Act 1972) under item 106, Schedule B of the Sales Tax (Exemption) Order 2013 

Companies engaged in hotel business 

1. Import duty exemption on specific equipment or machinery imported or purchased from a Licensed Manufacturing Warehouse, Bonded Warehouse or Free Zone under item 116 Part 1, Schedule of the Customs Duties (Exemption) Order 2013 

2. Sales tax exemption on specific equipment or machinery imported or purchased from a Licensed Manufacturing Warehouse, Bonded Warehouse or Free Zone under item 108, Schedule B of the Sales Tax (Exemption) Order 2013 

3. Sales tax exemption on specific equipment or machinery purchased from a manufacturer (licensed under the Sales Tax Act 1972) under item 107, Schedule B of the Sales Tax (Exemption) Order 2013

Haulage operators 

1. Sales tax exemption on prime mover (HS 8701.20.210) purchased from a manufacturer (licensed under the Sales Tax Act 1972) under item 109, Schedule B of the Sales Tax (Exemption) Order 2013

2. Sales tax exemption on container trailer (HS 8716.39.000) purchased from a manufacturer (licensed under the Sales Tax Act 1972) under item 109, Schedule B of the Sales Tax (Exemption) Order 2013 

The application must be submitted prior to the importation or purchase of the machinery, equipment, spare parts, consumables, prime movers and container trailers. As such, companies are advised to take into consideration the duration needed for the whole process to claim the exemption. 

This new mechanism with a self-declaration and selfregulatory environment; and time saving measures would be able to reduce the cost of doing business without the necessity of obtaining bank guarantee facilities for the clearance of goods. 

Malaysia Investment Development Authority, MIDA provides online applications facilities for the applications of the Self Declaration Mechanism for Tax Exemption: 

1. SPM 1/2014 (Manufacturers In The Principal Customs Area) 

2. SPM 2/2014 (Companies Engaged In A Hotel Business) 

3. SPM 3/2014 (Haulage Operators)

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