Some of Persons Exempted From Sales Tax 2018 As Listed in SALES TAX (PERSONS EXEMPTED FROM PAYMENT OF TAX) ORDER 2018

The SALES TAX (PERSONS EXEMPTED FROM PAYMENT OF TAX) ORDER 2018 which came into effect on 1 Sept 2018 is a list of persons who are exempted from payment of Sales Tax. The exemption is not automatic but is subject to the person complying with conditions specified in column (4) of Schedule A, Schedule B and Schedule C whichever is relevant to him.

The conditions also means that the person will be held accountable for keeping records and payment of Sales tax of goods procured and disposed.

Schedule A applies to goods purchased by Yang di-Pertuan Agong, Rulers of States including Ruling Chiefs and Governors, Federal or State Governments, Local Authorities (ie City Councils or Municipal Authorities) and also to persons appointed to purchase and supply on their behalf. Approved Universities and Public Higher Education Institutions may also procure goods exempted from Sales tax.

JADUAL A/SCHEDULE A

(1)

(2)

(3)

(4)

(5)

Item No.

Persons

Good Exempted

Conditions

Certificate to be signed by

1.

The Yang di-Pertuan Agong

All goods excluding petroleum

That it is proved to the satisfaction of the Director General that the goods are imported or purchased from a registered manufacturer for the personal or official use of the Yang di-Pertuan Agong.

The Controller of the Household

2.

The Ruler of any State including the Ruling Chiefs of Negeri Sembilan and the Yang di-Pertua Negeri of Melaka, Pulau Pinang, Sabah and Sarawak

All goods excluding petroleum

(a) That it is proved to the satisfaction of the Director General that the goods are imported or purchased from a registered manufacturer for the personal or official use of the Ruler, Ruling Chiefs or Yang di-Pertua Negeri; (b) that in respect of motor cars, the quantity does not exceed in number from those decided by the Rulers in Council.

The officer designated by the Ruler, Ruling Chiefs or Yang di-Pertua Negeri

3.

Federal or State Government Department

All goods excluding petroleum and imported motor cars

(a) That the goods are imported or purchased from a registered manufacturer by the Department concerned; (b) that they are used solely by the Department concerned; (c) that their cost is charged to a departmental vote appearing in the Federal or State Estimates and are not purchased out of a any other funds.

The Head of Department or such other officer nominated by him as the Director General may approve

4.

The Importer

All goods excluding petroleum and motor cars

(a) That the goods are imported for supply to any Federal or State Government Department; (b) that they will be used solely by the Government Department concerned; (c) that their cost is charged to a departmental vote appearing in the Federal or State Estimates and are not purchased out of any other funds; (d) that every application for exemption is accompanied by a certificate from the Head of the relevant Department that the goods are authorised to be imported on his behalf. (e) that the goods are to be purchased and supplied to Federal and State department at a price exclusive of sales tax in accordance with the term of contract.

The Head of Department or such other officer nominated by him as the Director General may approve

5.

Any person approved by the Director General

All goods excluding petroleum and motor cars

(a) the goods are purchased from a registered manufacturer for supply to any Federal or State Government Department in Malaysia; (b) that the Head of Department certifies in writing to the Senior Officer of Sales Tax— (i) that the goods are to be purchased and supplied to his department at a price exclusive of sales tax in accordance with the terms of contract; (ii) that they are used solely by the Government Department concerned and are not sold or otherwise disposed of except as sanctioned by him; (iii) that their cost is charged to a departmental vote appearing in the Federal or State Estimates and are not purchased out of any other funds.

The Head of Department or such other officer nominated by him as the Director General may approve

6.

Any local authority

All goods excluding motor cars and petroleum

(a) That the goods are imported or purchased from a registered manufacturer by the local authority concerned; (b) that they are used solely by the local authority concerned and are not sold or otherwise disposed of except after payment of sales tax; (c) that their cost is charged to a vote appearing in the Local Authority's Estimates and are not purchased out of any other funds.

The Head of the Local Authority or any officer nominated by him and approved by the Director General

Except for the King and Rulers, the exemption on Sales Tax to other mentioned does not extend to procurement of motor cars and petroleum. The exemption applies to local as well as imported goods. As Govt depts. and Local Authorities ie City or Municipal Councils seldom import or purchase directly but appoint another entity either a private Company or Agent to purchase and supply, the Exemption Order authorizes Exemption for Intermediary (Co or Agent) appointed. There is a certificate or Form that needs to be produced for this purpose and model of Certificate is included in the Exemption Order. 

The term ‘Motorcars’ can become a matter of contention as some local authorities(LA) or Federal or State Govt depts. purchased Vans and Pick-up Vehicles and claimed exemption. Does ‘motorcar’ include Vans, 4WD Pick-Ups or other vehicles or as commonly understood applies strictly to cars.

The condition iii. is column (4) states “..the cost is charged to a vote appearing in LA’s estimates” Local Authorities can purchase vehicles (Vans or 4WD Pick-up vehicles or Other vehicles) by using other means eg. loan financing from Banks or Financial Institutions or Special grants from Federal or State govts but my belief is this clause is included as liberal purchases could lead to abuse and  ultimately burden being borne by rate-payers or the Federal or State Govts.

Item 14 in the list applies to Diplomatic and Consuls and International Organisations which have a presence in Malaysia. The Exemption applies to all goods including vehicles excluding petroleum.

14.

Persons accorded with— (a) diplomatic privilages under— (i) the Diplomatic Privilages (Vienna Convention) Act 1966 [Act 636]; or (ii) the Consular Relations (Vienna Convention) Act 1999 [Act 595]; or (b) privileges and immunites under the International Organization (Privileges and Immunites) Act 1992 [Act 485].

All goods excluding petroleum

(a) That the goods are purchased, imported or acquired from a registered manufacturer or from a licensed warehouse approved by the Director General; (b) that the goods are imported, purchased or acquired for the official use for embassy, consular office and international organization.

The officer designated by such diplomatic missions.

Item 16 and 17 are worthy of note. Item 16 is the eligibility of Malaysians who have been overseas for more than 3 days and are returning. It lists the type and quantity of goods that may be brought in with being charged Sales tax. A similar list under Customs (Exemption…) also exempts Import duty. Item 17 applies to visitors returning from Designated areas ie Labuan, Langkawi or Tioman  and the time limit is shorter -24 hrs in case of Labuan or minimum 2 days in Langkawi or Tioman.

16.

Any person entering Malaysia (other than designated area)

(a) Wine, spirits, beer or malt liquor not exceeding 1 litre in all; (b) Tobacco not exceeding 225 grams (equivalent to 200 cigarettes); (c) new apparels not exceeding 3 pieces; (d) new footwear not exceeding one pair; (e) food preparations to a total value not exceeding RM150.00; (f) new portable electrically or battery operated appliances for personal care and hygiene not exceeding 1 unit each; (g) all goods other than that specified in this column, excluding tyres and tubes, to a total value not exceeding RM500.00; (h) goods listed under Schedule A of the Sales Tax (Goods Exempted From Sales Tax) Order 2018.

(a) That the articles are imported on or in the baggage of the importer; (b) that the importer satisfies the proper officer of customs that he is either— (i) not normally resident in Malaysia and intends to visit Malaysia for a period of not less than 72 hours; (ii) normally resident in Malaysia and is returning after an absence from Malaysia of not less than 72 hours (c) that in respect of items (a) and (b) in column (3), if the person imports in excess of the quantity or value of goods exempted, he shall be liable to pay customs duty on the excess only based on the prevailing rate imposed; (d) that in respect of items (c) to (f) in column (3), if the person imports in excess of the quantity or value of goods exempted, he shall be liable to pay tax on the excess only at a flat rate of 10% ad valorem.

Certificate not required

17.

Any person entering Malaysia from designated area

(a) Wine, spirit, beer or malt liquor not exceeding 1 litre in all; (b) tobacco product not exceeding 225 grams (equivalent to 200 stick of cigarettes); (c) new apparels not exceeding 3 pieces; (d) new footwear not exceeding one pair; (e) food preparations to a total value not exceeding RM150.00; (f) new portable electrically or battery operated appliances for personal care and hygiene not exceeding 1 unit each; (g) all goods other than that specified in this column, excluding tyres and tubes, to a total value not exceeding RM500.00; (h) goods listed under Schedule A of the Sales Tax (Goods Exempted From Sales Tax) Order 2018.

(a) That in the case of Labuan, the person satisfies the proper officer of customs that he has visited Labuan for a period of not less than 24 hours; (b) that in the case of Langkawi or Tioman, the person satisfies the proper officer of customs that he has visited Langkawi or Tioman for a period of not less than 48 hours; (c) that in respect of items (a) and (b) in column (3), if the person imports in excess of the quantity or value of goods exempted, he shall be liable to pay tax on the excess only; (d) that in respect of items (c) to (g) in column (3), if the person imports in excess of the quantity or value of goods exempted, he shall be liable to pay tax on the excess only at a flat rate of 10% ad valorem.

Certificate not required

Malaysian who are thinking of buying cheap cars in Langkawi and bringing them over to the mainland should note there is a limit of 90 days(in a year) for use in mainland ie outside Langkawi. This is stated in item 20.

20.

The driver or rider

One motor vehicle of any description, registered in and transported from Labuan or Langkawi and subsequently returned to Labuan or Langkawi

(a) That the motor vehicle has been registered by the Road Transport Department of Malaysia; (b) that the motor vehicle is registered by the proper officer of customs at Labuan or Langkawi at the time of transportation; (c) that the motor vehicle may only be landed at a customs port in the Principal Customs Area; (d) that the motor vehicle may remain in the Principal Customs Area for a period not exceeding 90 days in a year. (e) that immediately on its return from the Principal Customs Area the motor vehicle shall be produced to the proper officer of customs at Labuan or Langkawi, as the case may be; (f) that the Director General may impose any other conditions as he may deem fit and security as determined by the Director General is furnished to Customs for the return of the motor vehicle to Labuan or Langkawi.

The driver or rider and to be approved by the Director General

 This is not a complete liist. Others in the list includes Approved Universities and Higher Learning Institutions, Persons eg those purchasing and Exporting or Registered Manufacturers. This Exemption Order is designed to avoid incidences of Sales Tax being charged cumulatively or being embedded in the cost of products that ought not to be taxed.