Sales Tax Policy 3/2025 – Exemption on Raw Materials, Components, etc

The Royal Malaysian Customs Department (“RMCD”) has issued the Sales Tax Policy 3/2025 in respect of Sales Tax exemption granted by the Minister of Finance on raw materials, components, packing and packaging materials, manufacturing aids and cleanroom equipment that are imported or purchased locally from a registered manufacturer (by a manufacturer) to manufacture goods that were exempted from Sales Tax before 1 July 2025 and became taxable on/ after 1 July 2025. 

It follows that an application for refund can be made for Sales Tax paid on the above goods used in the manufacturing of taxable goods, subject to the following conditions:- 

1) The manufacturer has applied for registration as a registered manufacturer no later than 31 August 2025;

2) The importation or purchase from a registered manufacturer was made from 1 July 2025 to 31 August 2025;

3) Sales Tax has been paid; and

4) The goods are still under the manufacturer’s control.

Applications must be submitted using JKDM No. 2 Form to Cawangan Perakaunan Hasil, Bahagian Perkhidmatan Teknik, Jabatan Kastam Diraja Malaysia (JKDM) at the respective states no later than 30 November 2025. Manufacturers approved for the above refund are subject to conditions under the Sales Tax (Persons Exempted from Payment of Tax) Order 2018. 

Please click on the above header link for a copy of the Sales Tax Policy for further information.

The above exemption is welcome news for manufacturers who could not register on time by 1 July 2025 and as a result had incurred Sales Tax on goods imported or purchased, although they will be used to manufacture taxable goods. Affected manufacturers should quickly evaluate the applicability of the above exemption, ensure the conditions could be fulfilled and where applicable, apply for the refund no later than 30 November 2025.  

Evelyn Lee
Partner
evewflee@kpmg.com.my
+603 7721 2399

Crystal Chuah Yoke Chin
Associate Director
ycchuah@kpmg.com.my
+603 7721 2714

Regina Lau
Partner
reglau@kpmg.com.my
+603 7721 2188

Titus Tseu
Executive Director 
titustseu@kpmg.com.my
+603 7721 2822

Ng Fie Lih
Partner 
flng@kpmg.com.my
+603 7721 2514