Malaysia Tax Law - Sales Law

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TAX LAW - Sales Tax

Related Topics : Corporate Tax Law . Estate Tax Law . Gift Tax Law . Income Tax Law . Property Tax Law . Sales Tax . Service Tax

Sales Tax

This is an ad valorem single stage tax imposed at the import and manufacturing levels. Manufacturers are required to be licensed under the Sales Tax Act 1972.

Manufacturers whose annual sales turnover do not exceed RM100,000 are exempted from licensing. These companies are taxed based on their inputs. However to alleviate the burden of small manufacturers from paying sales tax up front on their inputs, these companies can be licensed under the Sales Tax Act 1972 in order to purchase tax-free inputs. With this option, manufacturers will only have to pay sales tax at the final stage of the manufacturing process.

The general rate for sales tax is 10%
Raw materials and machinery for use in the manufacture of taxable goods are eligible for exemption from the tax
Inputs for selected non-taxable products are also exempted
Certain non-essential foodstuffs and building materials are taxed at 5%
Cigarettes and liquor are taxed at 15%
Primary commodities, basic foodstuffs, basic building materials, certain agricultural implements and heavy machinery for use in the construction industry are exempted
Certain tourist and sports goods, books, newspapers and reading materials are also exempted.

Drawback of Sales Tax on Materials Used in Manufacture

Under Section 29 of the Sales Tax Act 1972, 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.

Similarly, goods from the Principal Customs Area which are used in the manufacture of other products by a factory in a Free Zone or on the islands of Langkawi or Labuan are considered as exports of goods from Malaysia

Last Updated : Monday, 23 July 2001 - 03:53:10 PM EDT©1999-2000
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