Duties and Sales Tax Exemption

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Exemption of Import Duty
For companies manufacturing finished products for the export market, full exemption from import duty on direct raw materials are normally granted, provided the raw materials/components are not manufactured locally or, where they are manufactured locally, are not of acceptable quality and price.

Drawback of Import Duty
All duty-paid goods used as parts or ingredients or as packaging materials in the manufacture of other goods which are subsequently exported, are eligible for drawback of import duty in full.

Exemption on Sales Tax and Excise Duty

A drawback of excise duty in respect of parts, ingredients or packaging materials of any goods manufactured may be claimed by the manufacturer if such parts, ingredients or packaging materials on which excise duty has been paid, are used in the manufacture of goods which are exported. All duty-paid goods used as materials for the manufacture of other goods which are subsequently exported, are eligible for drawback of the sales tax in full.

Tariff Protection
In line with the policy of an open economy, the Malaysian Government adopts a trade liberalisation approach and continuously reviews downward the country’s tariff structure. However, in certain cases, tariff protection is considered for deserving infant industries.

In granting tariff protection, the degree of utilisation of domestic raw materials, the level of local value-added, and the level of technology of the industry will be taken into consideration. Applications should be submitted to MIDA.