Introduction

Sales Tax Malaysia is governed under the Sales Tax Act 2018, which replaced the Goods and Services Tax (GST) Act 2014 on 1 September 2018. Unlike GST, which was a multi-stage tax, sales tax is a single-stage tax, charged only at the point of import or the sale of manufactured goods.

Scope of Sales Tax in Malaysia

Sales Tax is imposed on the following transactions:

1. Goods manufactured and sold, used, or disposed of by a registered manufacturer in Malaysia.
2. Goods imported into Malaysia by any person.
3. Low-value goods (RM500 and below) imported into Malaysia.

What is Manufacture?

Under the Sales Tax Act 2018, “manufacture” is defined as:

• Conversion of organic or inorganic materials into a new product (by size, shape, composition, or quality change).
• Assembly of parts into machinery or other products.

🚫 Excluded: Installation of machinery or equipment for construction purposes.

Taxable Goods vs Exempt Goods

• Taxable Goods: All goods not exempted.
• Exempt Goods (Schedule A, Sales Tax Exemption Order 2018):
  • Live animals and meat
  • Vegetables, fruits, rice flour, bread, eggs
  • Medicines
  • Construction materials

Designated Areas (DA) & Special Areas (SA)

Sales Tax is not applicable in:

• Designated Areas (DA): Labuan, Langkawi, Tioman, Pangkor.
• Special Areas (SA): Free zones, licensed warehouses, licensed manufacturing warehouses, petroleum supply bases, and Joint Development Areas.

No Sales Tax is levied when taxable goods are:

• Imported into DA/SA
• Transported between DA or SA
• Transported between DA and SA

📌 Exception: Certain goods (wine, spirits, beer, malt liquor, tobacco, petroleum products) are still taxable when prescribed by the Minister.

Key Takeaways

• Sales Tax Malaysia is a single-stage tax under Sales Tax Act 2018.
• Applies to manufactured goods, imports, and low-value goods.
• Exported goods, DA, and SA are exempt (except prescribed goods).
• Exemptions include food staples, medicines, and construction materials

FAQ – Sales Tax Malaysia

1. Is Sales Tax the same as GST?
   No. GST was multi-stage, while Sales Tax is single-stage, charged only once at import or manufacturing.
2. Are exported goods subject to Sales Tax?
   No. Exported goods are out of scope and not subject to Sales Tax.
3. What goods are exempt from Sales Tax?
   Examples include basic food items, medicines, and construction materials listed under the exemption order.
4. Do DA and SA enjoy full exemption?
   Yes, except for specific taxable goods like alcohol, tobacco, and petroleum products.

ANC Group – Your Personal Tax Advisor

Tax consulting is the core service of ANC Group. Our tax professionals provide clients with comprehensive tax support and guidance. We offer tax consulting and compliance services for expatriates, entrepreneurs, and listed and non-listed companies. Our tax consulting services include business tax, transaction tax, personal tax, and corporate income tax. We don’t just guide you in interpreting and applying complicated taxation rules, but to explore new opportunities and business trends. ANC Group keep you abreast with Malaysia tax updates and any changes in the local regulations. We work closely with industry specialists, authorities, and associated professionals within ANC Group to provide the best-in-class integrated tax planning solutions. ANC specialists coordinate the accounting and taxation services to bring your business to success.

If you need professional tax advisory services regarding the Malaysia Income Tax Act 1967, our team is ready to assist you. Contact us here to discuss how we can support your business.