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Official Import Customs Declaration in Malaysia: Duty & Tax Structure

In Malaysia, when performing a Formal Customs Declaration (K1 Form), importers are typically required to pay the following three primary taxes and duties:

1. Import Duty

• Tax Range: Depending on the HS Code (Harmonized System Code) of the goods, rates generally range from 0% to 60%.

• Average Rate: The average duty for industrial products is approximately 6.1%, though certain protected industries (such as automotive and steel) incur higher rates.

• Calculation Base: Calculated based on the CIF (Cost, Insurance, and Freight) value:

  $$(Cargo Value + Freight + Insurance) \times Duty Rate$$

2. Sales Tax (SST)

• Standard Rates: Most taxable goods are set at 10%, while specific food items and construction materials are at 5%.

• Calculation Method: Sales tax is calculated based on the sum of the "CIF Value + Import Duty Paid":

  $$(CIF Value + Import Duty) \times 10\% \text{ (or 5\%)} = Sales Tax Payable$$

3. Excise Duty

• Specific Goods Only: Applies only to specific controlled items, including:

  • Alcoholic Beverages

  • Tobacco Products

  • Motor Vehicles

• These rates are typically very high, designed to discourage specific consumption or to protect local industries.

2026 Key Policy Highlights

• Low-Value Goods Tax (LVG Tax): Imported goods valued below RM500 (via air, land, or sea) are now subject to a 10% sales tax.

• Green and Digital Exemptions: Under the 2026 Budget, customs duty exemptions are provided for specific environmental equipment and capital goods (machinery) related to digital transformation.

• e-Invoicing: Starting in 2026, Malaysia has fully implemented the e-Invoicing system. Invoice data during customs declaration must be highly consistent with the Customs system (uCustoms).