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Self-Declaration Mechanism for Duty Exemption On Machinery and Equipment

 

Self-Declaration Mechanism for Import Duty and/or Sales Tax Exemption on Machinery, Equipment, Spare Parts, Prime Movers and Container Trailers Through The Customs Duties (Exemption) Order 2017 and Sales Tax (Persons Exempted From Payment Of Tax) Order 2018:

Manufacturers in Principal Customs Area (PCA), companies engaged in hotel business and haulage operators can benefit from these facilities by claiming the exemption on import duty and/or sales tax on machinery, equipment, spare parts, prime movers and container trailers under these Orders through a self-declaration process.

Under this self-declaration mechanism, a company is required to submit to Customs the confirmation letter issued by MIDA and the list of machinery, equipment, spare parts, prime movers or container trailers to be imported or purchased for permission to claim the exemption. Application for import duty exemption should be manually submitted to the State Customs Control Station (Industrial Section) whereas for sales tax exemption it has to be submitted online via https://mysst.customs.gov.my/

The implementation on the mechanism comes under Customs Duties (Exemption) Order 2013 effective on 2nd May 2014 (later updated to Customs Duties (Exemption) Order 2017) and under Sales Tax (Persons Exempted From Payment Of Tax) Order 2018 effective on 1st October 2018.

The key areas of the exemptions are:

Manufacturers in PCA

  1. Import duty exemption on machinery and equipment excluding spare parts and consumables imported or purchased from a Licensed Manufacturing Warehouse (LMW), Bonded Warehouse or Free Zone under item 112 Customs Duties (Exemption) Order 2017
  2. Sales tax exemption on machinery, equipment and spare parts imported or purchased from a Licensed Manufacturing Warehouse (LMW), Bonded Warehouse or Free Zone or a manufacturer approved by the Director General under Item 55 Sales Tax (Persons Exempted From Payment Of Tax) Order 2018

Companies Engaged in Hotel Business

  1. Import duty exemption on equipment or machinery imported or purchased from a Licensed Manufacturing Warehouse (LMW), Bonded Warehouse or Free Zone under item 113 Customs Duties (Exemption) Order 2017
  2. Sales tax exemption on equipment or machinery imported or purchased from a Licensed Manufacturing Warehouse (LMW), Bonded Warehouse or Free Zone under Item 64 Sales Tax (Persons Exempted From Payment Of Tax) Order 2018
  3. Sales tax exemption on locally manufactured equipment or machinery purchased from a registered manufacturer under Sales Tax Act 2018 under Item 63 Sales Tax (Persons Exempted From Payment Of Tax) Order 2018

Haulage Operators

  1. Sales tax exemption on Prime Mover (HS 8701.20.91 00) purchased from a manufacturer registered under Sales Tax Act 2018 under Item 65 Sales Tax (Persons Exempted From Payment Of Tax) Order 2018
  2. Sales tax exemption on Container Trailer (HS 8716.39.40 00, 8716.39.91 00 and 8716.39.99 00) purchased from a manufacturer registered under Sales Tax Act 2018 under Item 65 Sales Tax (Persons Exempted From Payment Of Tax) Order 2018

 

Application must be submitted before the importation or purchase of the machinery, equipment, spare parts, prime movers or container trailers. Companies are advised to plan well their importation and take into consideration the time taken for the application to be processed by Customs.
MIDA provides online applications facilities for the applications of the self-declaration mechanism for tax exemption:

  1. SPM1 (Manufacturers in Principal Customs Area)
  2. SPM2 (Companies engaged in hotel business)
  3. SPM3 (Haulage operators)

With the implementation of the system, all confirmation letters will be processed online and signed using digital signature.


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Last Updated : Wednesday 14th November 2018