Tax Whiz – Amendments to Excise Duties, Customs Duties and Sales Tax Exemptions

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Amendments to Excise Duties, Customs Duties and Sales Tax Exemptions Conditions to purchase duty free goods at the international airports in Malaysia

KPMG in Malaysia

2 April 2020

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Excise Duties, Customs Duties and Sales Tax Exemptions Amendment Orders The following Orders have been gazetted to effect the amendments to the conditions to purchase duty free goods at the international airports in Malaysia: - . Excise Duties (Exemption) 2017 (Amendment) Order 2020 . Customs Duties (Exemption) 2017 (Amendment) (No. 2) Order 2020 . Sales Tax (Persons Exempted from Payment of Tax) (Amendment) Order 2020 These Orders come into operation on 1 April 2020. Please click here for a copy of the Orders at the at the official portal of e-Federal Gazette

The above amendments are in relation to persons entering Malaysia who are granted exemption from payment of Excise Duties, Customs Duties and Sales Tax on goods imported and purchased from any duty free shops at the international airports in Malaysia.

Amongst others, for purchases from the duty free shops, the total value of goods is increased from RM500 to RM1,000 and the minimum time frame for a visitor to visit Malaysia or for a Malaysia resident to be absent from Malaysia is reduced from 72 hours to 48 hours.

We set out in the following page a summary of the key amendments.

© 2020 KPMG Tax Services Sdn. Bhd., a company incorporated under Malaysian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 1 Tax Whiz 2020 | Amendments to Excise Duties, Customs Duties and Sales Tax Exemptions

For a person entering Malaysia (other than Labuan, Langkawi, Tioman and Pangkor)

Amendments Excise Duties Customs Duties Sales Tax

The total value of goods* Not applicable Limited to RM500 for Limited to RM500 for exempted any mode of travelling goods imported other than air mode Increased from RM500 Limited to RM1,000 to RM1,000 for goods through air mode purchased from duty free shop at the international airports

Goods exempted The prescribed goods are imported and Goods that are already purchased from any duty free shops at the point prescribed to be of entry or the international airports exempted from Sales Tax (i.e. non taxable) are removed

Minimum time frame 72 hours for any mode of travelling other than air 72 hours at the time he requirement for a visitor to mode imports the goods from visit Malaysia or for a Malaysia other country resident to be absent from 48 hours through air mode Malaysia Reduced to 48 hours at the time he purchases the goods from a duty free shop at the international airport

Imports or purchases in The person is liable to Either at the Instead of a flat rate of excess of the quantity or value pay Excise Duties on the prevailing rate or a 10% ad valorem, the of goods are exempted excess only based on the 10% ad valorem rate person is liable to pay prevailing rate imposed on the excess. Sales Tax on the excess only based on the prevailing rate imposed

* These are goods other than those currently exempted under the respective prescribed threshold such as alcohol, tobacco, apparels, footwear, food preparations and electrical or battery-operated appliances for personal care and exclude tyres and tubes.

© 2020 KPMG Tax Services Sdn. Bhd., a company incorporated under Malaysian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 2 Tax Whiz 2020 | Amendments to Excise Duties, Customs Duties and Sales Tax Exemptions

For a person entering Malaysia from Labuan, Langkawi, Tioman and Pangkor

Amendments Excise Duties Customs Duties Sales Tax

The total value of goods* Not applicable Increased from RM500 Increased from RM500 exempted to RM1,000 to RM1,000

Goods exempted No amendment No amendment Goods that are already prescribed to be exempted from Sales Tax (i.e. non taxable) are removed

Additional condition The goods are The goods are The goods are purchased from purchased from transported on or in the Labuan, Langkawi, Labuan, Langkawi, baggage of the person Tioman or Pangkor Tioman or Pangkor

The goods are purchased and transported on or in the baggage of the person

Minimum time spent in No amendment No amendment “Designated area” now Pangkor includes Pangkor

The person must have visited Pangkor for a period of not less than 48 hours

Imports/ transports in excess No amendment No amendment Instead of a flat rate of of the quantity or value of 10% ad valorem, the goods are exempted person is liable to pay Sales Tax on the excess only based on the prevailing rate imposed

Petaling Jaya Office

Tai Lai Kok Long Yen Ping Executive Director – Executive Director – Head of Tax and Head of Corporate Tax Head of Global Mobility Services [email protected] [email protected] +603 7721 7020 +603 7721 7018

Bob Kee Ng Sue Lynn Executive Director – Head of Transfer Pricing Executive Director – Head of Indirect Tax [email protected] [email protected] +603 7721 7029 +603 7721 7271

Soh Lian Seng Nicholas Crist Executive Director – Executive Director – Corporate Tax Head of Tax Risk Management [email protected] [email protected] + 603 7721 7022 +603 7721 7019

Dato’ Leanne Koh Neoh Beng Guan Executive Director – Corporate Tax Executive Director – Corporate Tax [email protected] [email protected] +603 7721 7026 + 603 7721 7025

Ong Guan Heng Chang Mei Seen Executive Director – Corporate Tax Executive Director – Transfer Pricing [email protected] [email protected] + 603 7721 7027 + 603 7721 7028

Ivan Goh Executive Director – Transfer Pricing [email protected] + 603 7721 7012

Outstation Offices

Penang Office Kuching & Miri Offices Evelyn Lee Regina Lau Executive Director – Penang Tax Executive Director – Kuching Tax [email protected] [email protected] +604 238 2288 (ext. 312) +6082 268 308 (ext. 2188)

Kota Kinabalu Office Johor Bahru Office Titus Tseu Ng Fie Lih Executive Director – Kota Kinabalu Tax Executive Director – Johor Bahru Tax [email protected] [email protected] +6088 363 020 (ext. 2822) +607 266 2213 (ext. 2514)

Ipoh Office Crystal Chuah Yoke Chin Tax Manager – Ipoh Tax [email protected] +605 253 1188 (ext. 320)

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Petaling Jaya Kota Kinabalu Level 10, KPMG Tower, Lot 3A.01 Level 3A, 8, First Avenue, Bandar Utama, Plaza Shell, 47800 Petaling Jaya, Selangor 29, Jalan Tunku Abdul Rahman, Tel: +603 7721 3388 88000 Kota Kinabalu, Sabah Fax: +603 7721 3399 Tel: +6088 363 020 Email: [email protected] Fax: +6088 363 022 Email: [email protected]

Penang Johor Bahru Level 18, Hunza Tower, Level 3, CIMB Leadership Academy, 163E, Jalan Kelawei, No. 3, Jalan Medini Utara 1, 10250 Penang Medini Iskandar, Tel: +604 238 2288 79200 Iskandar Puteri, Johor Fax: +604 238 2222 Tel: +607 266 2213 Email: [email protected] Fax: +607 266 2214 Email: [email protected]

Kuching Ipoh Level 2, Lee Onn Building, Level 17, Ipoh Tower, Jalan Lapangan Terbang, Jalan Dato’ Seri Ahmad Said, 93250 Kuching, Sarawak 30450 Ipoh, Perak Tel: +6082 268 308 Tel: +605 253 1188 Fax: +6082 530 669 Fax: +605 255 8818 Email: [email protected] Email: [email protected]

Miri 1st Floor, Lot 2045, Jalan MS 1/2, Marina Square, Marina Parkcity, 98000 Miri, Sarawak Tel: +6085 321 912 Fax: +6085 321 962 Email: [email protected]

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The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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