Important Link

Sales Tax Policy 1/2022 – Sales Tax Exemption on Pallets

The Royal Malaysian Customs Department (“RMCD”) has just published the Sales Tax Policy 1/2022 (dated 5 April 2022) relating to Sales Tax exemption on the importation or acquisition of pallets. 

Set out below is a summary of the Policy:-

  1. 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 Exemption Order.  In addition, the pallets must not be returned to the registered manufacturer and must belong to the buyer.
  2. Pallets that are used for the purpose of transporting goods, reusable or will be returned to the registered manufacturer shall not be categorised as packaging materials, hence do not qualify for Sales Tax exemption under Item 1 or Item 3, Schedule C of the Exemption Order.
  3. 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 Exemption Order upon re-importation of the pallets.

The abovementioned “Exemption Order” refers to the Sales Tax (Persons Exempted from Payment of Tax) Order 2018.

Note that this is the first Policy issued by RMCD on Sales Tax matters. This Policy provides clarity on when exemption can apply or otherwise, specifically for pallets. It remains to be seen whether the same would apply for other types of materials such as bottles, drums, flexi-bags and cylinders. 

Businesses who enjoy Sales Tax exemption should review the list of goods under exemption and assess whether there is a need to update the list.   As the application for Sales Tax exemption is processed via the system, there could be a risk that the exemption granted automatically is invalid due to failure in meeting certain conditions.

Please click on the above header link for  a copy of the Sales Tax Policy at the MySST portal (only available in Malay language).

Our highlights are intended to provide a general overview of the key proposed tax changes and should not be used or relied upon as a substitute for detailed advice or as a basis for formulating business decisions.

For customized guidance, please do not hesitate to reach out to your trusted KPMG adviser(s),

Petaling Jaya Office

Soh Lian Seng
Executive Director -
Head of Tax and Head of Tax Dispute Resolution
+ 603 7721 7019

Bob Kee
Executive Director -
Head of Transfer Pricing
+ 603 7721 7029

Tai Lai Kok
Executive Director -
Head of Corporate Tax
+ 603 7721 7020

Long Yen Ping
Executive Director -
Head of Global Mobility Services
+ 603 7721 7018

Ng Sue Lynn
Executive Director -
Head of Indirect Tax
+ 603 7721 7271

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Penang Office

Evelyn Lee
Executive Director -
Penang Tax
+604 238 2288 (ext. 312)

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Crystal Chuah Yoke Chin
Tax Manager -
Ipoh Tax
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Kuching & Miri Office

Regina Lau
Executive Director -
Kuching & Miri Tax
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Titus Tseu
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Kota Kinabalu Tax
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Ng Fie Lih
Executive Director -
Johor Bahru Tax
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