All DUTIES & TAXES in Malaysia that you need to know

Have you ever understand the duties and taxes that you have been paying in Malaysia?

The Malaysia Customs Department calculates import duties and taxes based on several factors:

• The HS code classifies the product type.

• The CIF method (Cost, Insurance, and Freight) determines duties and taxes based on the goods' value, including shipping and insurance.

• The commercial invoice details the product's description, end-use, and country of manufacture.

• International trade agreements (FTA) may impact tax and duty amounts.

• Incoterms specify whether the sender or receiver is responsible for shipping costs, including duties and taxes.

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Malaysia has undergone several changes in its taxation system, moving from Sales and Service Tax (SST) to Goods and Services Tax (GST) and back to SST.

SST (Pre-2015) - Sales and Service Tax System – (5% or 10%)

GST (2015–2018) - Goods and Services Tax – (6%)

Return to SST (2018 – Present) - (5% or 10%)

Types of Import Duties & Taxes in Malaysia in Year 2025. 

A. Import Duty (Customs Duty)

• Applies to: Selected goods based on their HS Code. (mainly items that can be produced locally)

• Rates: Typically 0% to 30% (for general goods), but up to 300% for vehicles.

• Waivable by Free Trade Agreement with Strategic Trade Partners of Malaysia

• Formula:

Import Duty = CIF Value × Import Duty Rate%

B. Sales Tax (ST)

• Applies to: Most imported goods (except exemptions like essential food, medicines).

• Rate: 5% or 10% depending on product type.

• Waivable by manufacturers, exporters, and government projects

• Formula:

Sales Tax = (CIF Value+Import Duty) × Sales Tax Rate%

C. Excise Duty

• Applies to: Luxury goods (cars, alcohol, tobacco, cosmetics, etc.).

• Rates: Varies (e.g., 60%-105% for cars, 15%-40% for alcohol).

• Formula:

Excise Duty=(CIF Value+Import Duty)×Excise Duty Rate%

Besides on the duties and taxes on the imported goods into Malaysia, Service Tax (SST) at 6% applies to various logistics and transportation-related services.

Which Logistics Services Are Subject to SST (6%)?

The Service Tax (6%) applies to taxable logistics services provided in Malaysia, including:

A. Freight and Transportation Services

✅ Domestic transportation (trucking, courier, and inland freight).❌ International transportation (import/export shipping, air freight) is exempt from SST.

B. Warehousing & Storage Services

✅ Rental of storage space, warehouses, and cold rooms.✅ Handling and processing of stored goods.

C. Customs Clearance & Freight Forwarding

✅ Import/export customs brokerage services.✅ Document processing, duties handling, and coordination.

D. Packing & Distribution Services

✅ Packaging, labeling, sorting, and order fulfillment services.

Keys takeaways

CIF Value = Cost + Insurance + Freight (Total landed cost at Malaysia’s port).

Duties and Taxes depend on the HS Code of the product.

Duty Exemptions apply for certain categories (with FTA)

SST Exemptions apply for manufacturers, exporters, and government projects

Import Duties, Sales Taxes and Excise Duties are taxable on imported items, Services Taxes are taxable on Total Logistics Services.