Malaysia: Guidance on sales tax exemption on importation of pallets
A Sales Tax Policy was published relating to the sales tax exemption on the importation or acquisition of pallets.
The sales tax exemption on the importation or acquisition of pallets
The Royal Malaysian Customs Department (RMCD) published the Sales Tax Policy 1/2022 (dated 5 April 2022) relating to the sales tax exemption on the importation or acquisition of pallets.
Set out below is a summary of the policy:
- Any registered manufacturer or person acting on behalf of a registered manufacturer may be exempted from paying sales tax on the importation or acquisition of pallets, provided the pallets are used as packaging materials for the exportation or sale of finished goods (taxable), pursuant to Item 1 or Item 3, Schedule C of the Sales Tax (Persons Exempted from Payment of Tax) Order 2018. In addition, the pallets must not be returned to the registered manufacturer and must belong to the buyer.
- Pallets that are reusable or returnable to the registered manufacturer are not categorized as packaging materials and hence do not qualify for the sales tax exemption under Item 1 or Item 3, Schedule C.
- For pallets which are used to transport goods exported and subsequently reimported, the importer may be exempted from payment of sales tax under Item 39, Schedule A of the Sales Tax (Persons Exempted from Payment of Tax) Order 2018 upon re-importation of the pallets.
It remains to be seen whether this same policy will be applied by the RMCD to other types of materials such as bottles, drums, flexi-bags and cylinders.
Read an April 2022 report [PDF 1.2 MB] prepared by the KPMG member firm in Malaysia
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