Facilities provided under Sales Tax to Registered manufacturers, Non registered manufacturers and Traders

SALES TAX (PERSONS EXEMPTED FROM PAYMENT OF TAX) ORDER 2018 

Sales Tax Registered Manufacturers, Non-Registered Manufacturers and Businesses engaged in Trading locally or in the Export market need to take note of provisions in the above legislation to take advantage of facilities provided. The provisions are designed to ensure that Sales Tax being a single stage tax on local consumption is not added more than once into a locally manufactured product and that it isnt added to costs on goods exported ensuring our Traders may competitively price products in the Export market.

1.     For example item 38 in Schedule A of the above order:

Item No.

Persons

Good Exempted

Conditions

Certificate to be signed by

38.

Manufacturer in the Principal Customs Area

All goods transported to a Free Industrial Zone or moved to a licensed manufacturing warehouse or 65A of the Customs Act 1967 for subcontract work and subsequently re-imported or returned

(a) That prior approval of the Director General must be obtained by the manufacturer; (b) that the goods belong to a category that has been approved by the Director General; (c) that the said goods are exported or moved and re-imported or moved by the same route; (d) that the said manufacturer shall furnish not later than the 10th of each month to the customs a return in such form and manner as the Director General may determine; (e) that in issuing such approval the Director General may impose such conditions as he may deem necessary.

The Manufacturer

2.     A registered Sales tax manufacturer located in the Principal Customs Area ie in Malaysia outside

 a FIZ may send his goods(transport his goods) to a person in the FIZ Area or to an LMW for 

subcontract work and he must acquire back the same goods that has been worked on. Movement of 

goods to FIZ is considered export and bring back the goods is considered an Import.

3.     All goods exported except in some exceptional cases can be exported without being charged Sales 

tax.If the manufacturer exports by himself a Customs Export Declaration Form (Customs No 2) is to 

be used:

56.

Registered Manufacturer

All goods, exported from Malaysia

That the exportation is supported by Customs Form No 2 and other documents if required by the Director General.

Certificate not required

4.     Item 57 applies to cases where a Sales tax manufacturer may not want to export himself or a trader buys goods that he intends to export himself. There are certain approvals to be obtained and the goods need to be exported within 6 months.

57.

Any person approved by the Director General

All goods locally manufactured or manufactured by any manufacturer licensed under section 65A of the Customs Act 1967 or by any manufacturer in the Free Industrial Zone under the Free Zones Act 1990 for export

(a) That the goods are purchased from a registered manufacturer or from any licensed manufacturing warehouse or free industrial zone; (b) that the goods be exported within 6 months from the date of purchase; (c) that the goods shall not be sold or otherwise disposed of in Malaysia except as approved by the Director General and upon payment of the appropriate tax; (d) that the person approved shall pay all the taxes on any goods that cannot be accounted for; (e) that if the goods are not exported within six (6) months from the date of purchase the person approved shall be liable to pay all the taxes on the goods not exported.

The person approved by the Director General

5.    Can a registered Sales tax manufacturer send goods that he manufactures, either raw materials and components lightly manufactured or cut, to be further worked upon by a business or person who is not required to be registered under Sales Tax? Yes- see as below:

Item No.

Persons

Good Exempted

Conditions

Certificate to be signed by

62.

Any person approved by the Director General

All goods (including packing materials) obtained from a registered manufacturer for subcontract work and subsequently returned

(a) That the goods belong to a category that has been approved by the Director General; (b) that the goods are for further manufacturing or to complete its manufacture by any person who is not registered under the Sales Tax Act 2018; (c) that the goods received shall, without delay, be acquired back by the registered manufacturer from the person approved in column (2); (d) that the person approved in column (2) shall pay all the taxes on any goods that cannot be accounted for; (e) that in issuing such approval the Director General may impose such conditions as he deems necessary.

The person approved by the Director General

In my next post I shall quote some decisions made under the earlier legislation - Sales Tax Act 1972 that will be applicable too under the new legislation although much depends on the Authorities interpretations.