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Malaysia: Clarification on meaning of "used" for sales tax drawback claims

Guidance on activities disqualifying taxable goods from sales tax drawback

May 21, 2026

The Director General of Customs on May 18, 2026, issued Public Ruling 2/2026 clarifying the meaning of the word "used" for sales tax drawback claims.

Sales tax drawback may be allowed on taxable goods that are imported or purchased locally and subsequently exported, subject to meeting conditions specified under Regulation 17 of the Sales Tax Regulations 2018 (STR 2018). One of the conditions is that the taxable goods must not be used after importation or purchase.

The public ruling clarifies that the term "used" refers to taxable goods on which any activity has been carried out, including value-added processes or manufacturing processes. Any activity, value-added process, or manufacturing process carried out on taxable goods after importation or purchase is regarded as "used", except for labeling, packaging, or re-packaging. The excluded activities of labeling, packaging, or re-packaging must not result in the taxable goods to be given added value.

Read a May 2026 report prepared by the KPMG member firm in Malaysia

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