Ultimate Guide to Import Taxes in Malaysia

In Malaysia, import taxes, also known as import duties or customs duties, are imposed on various goods that are brought into the country. 

These taxes serve multiple purposes, including generating revenue for the government, protecting domestic industries, and regulating the flow of goods. 

This article is a breakdown of the different types of import taxes and how they are calculated.

Types of Import Taxes in Malaysia

There are several different types of import taxes in Malaysia.

1. Customs Duty

   • Customs Duty or import duty is Malaysia’s most common import tax type. It is a percentage-based tax imposed on the ad valorem value of imported goods. It can range from 2% to 60%, depending on the type of goods. 

2. Excise Duty

   • Excise duty is typically applied to goods such as alcoholic beverages, tobacco products, and motor vehicles. The rates for excise duty are particular to each type of product, and they can be pretty high.

3. Sales and Service Tax (SST)

   • The Sales and Service Tax is a consumption tax that replaced Malaysia’s Goods and Services Tax (GST) in 2018. SST is applied to selling goods and providing services at various stages of the supply chain. The rates for SST can vary depending on the type of goods or services and the value of the goods.

4. Tariff Rate Quotas (TRQs)

   • TRQs are specific import quotas that may apply to certain agricultural products and commodities. Within the TRQ, lower import duties may be used, while quantities exceeding the quota may face higher duties.

5. Preferential Tariffs

   • Malaysia has trade agreements with various countries and regions, such as the ASEAN Free Trade Area (AFTA), which offers preferential tariffs for imports from these regions. These agreements can result in reduced or zero-duty rates for eligible goods.

6. Anti-Dumping and Countervailing Duties

   • In cases where it is determined that imported goods are being sold at a lower price than their fair market value or are subsidised by foreign governments, anti-dumping and countervailing duties may be imposed to protect domestic industries.

How Import Taxes in Malaysia Are Calculated

Import tax calculations in Malaysia are based on the customs value of the imported goods and the applicable duty rates. The customs value is determined by the Customs Valuation Agreement of the World Trade Organization (WTO), and it includes the cost of the goods, insurance, and freight (CIF). Import taxes in Malaysia are generally calculated as follows:

1. Calculate the Customs Value (CIF)

   • The CIF value is determined by adding the following costs:
     • The cost of the goods (the actual price paid or payable for the imported items).
     • The cost of insurance covers the goods during transportation.
     • The cost of freight or shipping charges to deliver the goods to the port of entry in Malaysia.

2. Determine the Applicable Duty Rates

   • The next step is to identify the specific import tax rates that apply to the type of imported goods using the HS (Harmonised System) Code. Malaysia has a range of duty rates, which can vary widely based on the product’s classification in the Customs Tariff Schedule.

3. Calculate the Import Taxes

   • Calculate the Customs Duty: Multiply the customs value (CIF) by the applicable customs duty rate. For example, if the rate is 10% and the CIF value is RM 10,000, the customs duty would be RM 1,000 (10% of RM 10,000).
   • Calculate Excise Duty: If the imported goods are subject to excise duty (e.g., alcoholic beverages, tobacco products, or motor vehicles), apply the specific excise duty rates to the relevant base (e.g., volume, capacity, or value).
   • Calculate the Sales and Service Tax (SST): SST is calculated on the value of the imported goods, which may include the CIF value, import duty (CD and excise duty), and other applicable taxes. SST rates vary depending on the type of goods and services. Some goods may have zero-rated SST.

4. Determine Any Other Applicable Taxes and Charges

   • Other taxes or charges may apply depending on the specific product, such as Import Sales Tax, Anti-Dumping Duties, Countervailing Duties, or other special duties or charges. These should be added to the total tax liability.

5. Total Import Tax Calculation

   • Add up all the applicable taxes and charges to determine the total import tax amount for the imported goods.

How Luwjistik Helps

Luwjistik is a logistics platform solution crafted to optimise operations and facilitate collaborations between businesses and a network of service providers. It provides an all-inclusive platform that simplifies your decision-making regarding import tax calculations, ensuring a seamless clearance process. 

Here’s how Luwjistik can assist you:

• Marketplace
  • This is your gateway to a network of trusted partners, including customs brokers in 22 countries. You can choose customs brokerage services that can help you figure out import taxes, and you get access to their expertise for accurate tax classifications, trade regulations and tax calculations.
• L-Freight
  • This tool simplifies customs processes with document submission and tracking. It ensures accurate and transparent customs declarations, reducing the risk of import tax mistakes. You can also track your shipments in real time, including customs clearance status.
• Node Calculator
  • This comprehensive tool helps businesses navigate import taxes and improve supply chain operations. It breaks down costs at every stage of the supply chain, providing transparency and helping you make well-informed decisions.

Start your journey of discovery into our advanced logistics solutions by visiting luwjistik.com or reaching out to our representative at commercial@luwjistik.com today.