Malaysia: New indirect tax guidance effective 1 January 2024

The following Indirect Tax (Amendment) Regulations and Indirect Tax New and Amendment Orders were gazetted on 29 December 2023 (except where otherwise stated) and became effective 1 January 2024.

Indirect Tax (Amendment) Regulations

• Sales Tax (Amendment) (No 2) Regulations 2023: Updated prescribed circumstances and conditions when a registered manufacturer can issue a credit note or debit note and updated to reflect that the form and manner is to be determined by the Director General
• Sales Tax (Low Value Goods) (Amendment) Regulations 2023: New Regulation 6A added to allow registered seller to issue prescribed credit note or debit note under specific circumstances and conditions
• Sales Tax (Customs Ruling) (Amendment) Regulations 2023: Updated to reflect that the form and manner is to be determined by the Director General
• Service Tax (Amendment) (No 2) Regulations 2023: Form JKDM No 2 no longer in use and updated to reflect that the form and manner is to be determined by the Director General
• Service Tax (Customs Ruling) (Amendment) Regulations 2023: Updated to reflect that the form and manner is to be determined by the Director General
• Service Tax (Digital Service) (Amendment) Regulations 2023: Updated to reflect that the form and manner is to be determined by the Director General
• Customs (Amendment) (No 4) Regulations 2023 (gazetted on 28 December 2023): Amendments are made to Regulation 6 (prescribed ports)
• Tourism Tax (Amendment) (No 2) Regulations 2023: Updated to reflect that the form and manner is to be determined by the Director General

Indirect Tax New and Amendment Orders

• Sales Tax (Persons Exempted from Payment of Tax) (Amendment) (No 3) Order 2023 
  • Items 1 and 2 of Schedule B 
    • Exempted goods include goods transported from a licensed warehouse, licensed manufacturing warehouse or a free zone
    • Included “any other conditions as the Director General may deem fit to impose”
    • Certificate updated to be signed by the manufactured approved by the Director General
  • Item 4 of Schedule B
    • Exempted goods now covers “raw materials, components, manufacturing aids, cleanroom equipment and, packing and packaging materials”
    • Exempted goods include goods transported from a licensed warehouse, licensed manufacturing warehouse or a free zone
    • For manufacturing aids and cleanroom equipment, the goods are to be specified by the Director General
    • Included “any other conditions as the Director General may deem fit to impose”
    • Certificate updated to be signed by the manufactured approved by the Director General
  • Items 1 and 3 of Schedule C
    • Exempted goods now covers “raw materials, components, manufacturing aids, cleanroom equipment and, packing and packaging materials”
    • For manufacturing aids and cleanroom equipment, the goods are to be specified by the Director General
    • The list of milk products manufactured which qualify for exemption updated to be in line with item 3 of Schedule B
    • Goods damaged, destroyed due to unavoidable accident or that do not meet the specified quality may still qualify for the exemption by applying in writing to the Director General 
  • Items 2 and 4 of Schedule C
    • Exempted goods now covers “raw materials, components, manufacturing aids, cleanroom equipment and, packing and packaging materials”
    • For manufacturing aids and cleanroom equipment, the goods are to be specified by the Director General
    • Exempted goods includes goods transported from a licensed warehouse, licensed manufacturing warehouse, petroleum supply base or a free zone
    • Goods damaged, destroyed due to unavoidable accident or that do not meet the specified quality may still qualify for the exemption by applying in writing to the Director General
• Sales Tax (Goods Exempted from Tax) (Amendment) (No 2) Order 2023  (gazetted on 28 December 2023): Amendments in relation to heading 90.25 (hydrometers and similar floating instruments, thermometers, pyrometers, barometers, hygrometers and psychrometers, recording or not, and any combination of these instruments)
  
• Sales Tax (Rate of Tax for Low Value Goods) Order 2023: Sales tax rate for low value goods (LVG) is 10%
• Sales Tax (Determination of Low Value Goods) Order 2023 (gazetted on 28 December 2023): Minister has determined that LVG is all goods which are sold at a price not exceeding RM500 and brought into Malaysia by land, sea or air, as well as goods specified in a Schedule
• Excise Duties (Amendment) (No 3) Order 2023: Excise duty rate for goods falling under Chapter 20 (Heading 20.09) and Chapter 22 (Heading 22.02) increased from RM0.40 per litre to RM0.50 per litre, and chewing and sucking tobacco (Subheading 2403.99.50 00) now subject to excise duty at RM27 and 5% per kg
   

Read a January 2024 report prepared by the KPMG member firm in Malaysia