23/02/2022
PUBLIC PROGRAM
Custom Tax Incentives (Exemption)
Under Section 14.2
Customs Act 1967 and related SST Rules
1) Introduction
The Malaysian government provides various tax incentives for the private sectors to doing business in Malaysia. In particular, manufacturing sector is granted customs tax exemptions as provided under the Customs Act 1967 & for sales tax under Schedule A,B,C under the Sales Tax ( Person exempted from Payment of Tax) Oder 2018 on raw materials, components, packing and packaging materials, manufacturing aids, machineries, equipment & spare parts to be imported/purchased locally. These tax incentives would in turn help to lower cost of production & make the products/services more competitive in the global economy.
This course caters primarily for SST registered person ( Sales Tax) & non-SST person ( manufacturer who manufactures sales tax exempt goods).
Besides, participants are provided updates on the latest Sales and Service tax rules in particular on sales tax exemption applicable to sales tax registered manufacturers and non registered manufacturers known as approved major exporter scheme (AMES)
2) Course objectives
Upon completion of the course, participants will be able to :
~ Understand the correct procedures, guidelines & customs regulations with regards to Customs duties exemption on raw materials & components, etc;
~ How to use the self-declaration mechanism to apply for sales tax exemption on purchase of machinery, equipment and spare parts used in the manufacturing process.
~ Imposition/exemption of sales tax on sale by a sales tax registered person to PCA/ LMW/FIZ/DA/Oversea;
~ Approved Major Exporter Scheme (AMES) for sales tax exemption on
purchase/import of raw materials, components, packing and packaging materials
used by manufacturers of sales tax exempt goods.
~ Understand online application on sales tax exemption under schedule A, B & C;
~ Subcontract work and its import duty & sales tax implication;
~ Bypassing Mida tax exemption application by applying other Customs legislative tax
Exemption Orders under Customs Duties (Exemption) Order 2017
~ Help manufacturers & company CEO to plan & make use of the tax exemptions offered by the government;
~ Be able to reduce the cost of production.
3) Course Contents
Module 1- Introduction
Why apply for tax incentives?
~ Helps to lower cost of production,
~ Increase competitive edge,
~ Benefit consumers.
1.1) Person/persons qualified for exemption
I. Registered sales tax manufacturers ( RSTM) who cater more for domestic.
II. Markets;
III. Sales tax exempt manufacturers under Schedule B, Sales Tax (Persons Exempted from Payment of Tax ) Order 2018.
1.2) Criteria for tax exemption for manufacturing sector:
~ Raw materials/components/machinery/equipment/spare parts used directly in the production.
~ Non-availability of raw materials locally.
~ Finished goods are more catered for domestic market
~ Specification & prices differ.
~ Major Policy change on Non granting tax exemption : Drawback
Facilities.
~ Approved Major Exporter Scheme (AMES).
Module 2 - Type of tax exemption:
~ Effective 1.4.2015, only import duty exemption on raw materials & components is granted by the Ministry of Finance/ (MIDA).
~ Effective 2.5.2014, Import duty exemption on machinery, equipment, are now approved by the Customs department with the condition that a letter of support from Mida is attached.
~ 10.8.2017 application of import duty exemption on import of raw materials for manufacture of finished goods for export market by iron and steel product manufacturer is no more available.Applicants are advised to use drawback 99 facilities to claim import duty paid upfront.
~ 1.1.2018,manufacturers who are licensed under the Industrial Coordination Act 1975 are entitled for import duty exemption on importation of raw materials as listed in item 105 & 106, Customs Duties (Exemption ) order 2017.
~ Item 99, Customs duties Exemption Order on import duties exemption for importer of iron & steel products.
~ On 1.9.2018, qualified manufacturers listed under 1,2,3 and 4, schedule B, Person exempted from payment of Tax Order 2018 are entitled for exemption of sales tax on purchase of raw materials, component; packing and packaging materials.
~ On 1.7.2020, manufacturer of sales tax exempt goods and trading company are given Sales tax exemption on goods purchased/imported subject to certain conditions.
2.1) Level of exemption, quantity approved, extension period &
addition of quantity:
~ Export & domestic market to determine level of exemption,
~ Period of exemption:1-3 years,
~ Quantity: new company/existing company.
Procedure of application:
~ Role of MIDA.
~ Forms used for application.
Agencies involved in duty exemption:
~ MIDA~~~~~ Processing and Approving.
~ CUSTOMS ~~~~~ Enforcement.
Module 3 - Types of manufacturers qualify for tax exemption:
Sales tax registered manufacturer (STRM) and non registered manufacturers (NRM)
Role of Customs in enforcing provisions of the law under
Customs Act 1967 & Sales Tax Act 2018
1. Visit & surprise check by senior officer of customs
2. Auditing of records & documents
3. Control of Importation by using bank guarantee (only on raw materials
and Components) while waiting for Mida tax exemption
4. Control of Importation for company paying duty under protest while
waiting for Mida tax exemption
5. Disposal of defective finished goods; raw material/component/
machinery ;manufacturing waste.
3.1) Responsibilities of a person i.e. Manufacturer holding exemption facilities
Submission of quarterly return on raw material/component/finished goods,
Submission of inventory list for machinery & equipment.
Impact of Sales tax on sale:
Export sales.
Sale to LMW/FIZ.
Sale to SST registered manufacturer.
Sale to trading company.
Sales tax exemption on sub-contract work:
~ Sub-contract work performed on PCA manufacturers
~ Sub-contract work performed on LMW and FIZ
~ Sub-contract further to a third party
~ Customs documents
Temporary Import on machineries/equipment and avoidance of tax.
~ATA carnet
~ Temporary import under Section 97, Customs Act 1967 & Item 33, Schedule A, Sales
Tax ( Person exempted from payment of Tax ) Order 2018
Module 4- Addition of premise/goods/change of address
Re-import
Re-export
Wind up; receivership; liquidation
Fire , Theft , Loss
4.1) NON-CONPLIANCE of conditions
~ Goods means for export were sold locally.
~ Sale of machinery/raw materials without Mida (Customs)approval.
~ Poor record/non record keeping.
~ Changing of address/addition of premise without approval.
~ Disposal of goods without customs approval.
Penalties for non compliance
~ Section 15.1, Customs Act 1967
~ Section 15.2,Customs Act 1967
~ Section 138,Customs Act 1967
~ Section 86(1), Sales Tax Act 2018
Remission of customs duty and Sales Tax
~ Remission of tax by the Director General of Customs.
~ Remission of tax by the Minister of Finance.
Customs Appeal Tribunal
~ Role of Customs Appeal Tribunal
Module 5
Conclusion
~ Benefits of tax exemption under Section 14.2 versus LMW and FIZ
~ Constraints
~ Impact of drawback facilities under section 99, Customs Act 1967
~ Impact of Free Trade agreement on import of raw materials /
/components.
4) Target group
~ Manufacturers, accountants, shipping managers & executives, logistic personnel Forwarding agents.
5) Facilitator’s CV
Mr. GOH KIN SIANG (IC 501205-01-5341) was holding the post of Deputy Director of Customs, Putrajaya before his retirement after having served the Royal Malaysian Customs (RMC) for 31 years. His academic credential includes a Bachelor of Economics (Hons) degree from University Malaya. He has a wide range of working experiences with the Royal Malaysian Customs (RMC).
He has vast experience in the following areas: Import, Export, Sales tax, Excise, Petroleum, Service tax, Industry (LMW, Treasury exemption, Free zone & Warehouse) & last but not least on the Preventive aspects would provide valuable knowledge and information for the participants.
Apart from his expertise and knowledge, he has worked as a resource person for Johor Freight Forwarders Association(JOFFA) i.e. to train customs forwarders and other logistics staff. He had also worked as a lecturer in the Royal Customs Academy, Melaka.
After his retirement, he starts to conduct customs trainings to assist Logistic companies, Freight Forwarders, Shipping Companies, Haulage Transport and other SCM sectors to share his invaluable experience so that participants would know the following exemptions available and can apply effectively at their respective work places.
Participants ranging from license holders of LMW, Sales tax, Free zone & Warehouse operators; holders of Treasury Tax Exemption; importers, exporters; claimants of customs tax refunds & drawbacks & lastly tax consultants would benefit greatly and save costs for their companies from this training session.
