Many incentives has been introduced by Malaysian Government as a driven to encourage new foreign and domestic investments. The Direct Tax incentives, such as Pioneer Status (PS) and Incentive Tax Allowance (ITA) are managed by MIDA while other Indirect Tax incentives, such as Exemptions from Import Duty and GST (Goods and Service Tax) will be controlled by Royal Malaysian Customs Department.

Licensed Manufacturing Warehouse (LMW)

The major and well known customs facility for manufacturer in Malaysia is LMW (Licensed Manufacturing Warehouse) License.

LMW is a manufacturing unit (factory) licensed under section 65 and 65A of the Customs Act 1967 and is directly control by Royal Malaysian Customs Department. It is control by way of documentation and subject to all customs rules and regulations.

LMW is a facility provided for export oriented companies where 80% of the finished products must be exported or sell to another LMW companies. LMW licensees are able to import prior approved dutiable raw materials / components / machineries / equipment including accessories, which is directly used in the manufacturing process WITHOUT paying the Import Duty.

Sales & Services Tax (SST)

Since the implementation of SST from 1^st September 2018, Sales tax shall be levied and payable on any importation of taxable goods into Malaysia AND any sales of taxable goods by registered local manufacturer.

Anyway, registered manufacturer may apply for the exemption from paying the Sales Tax for imported or local manufactured goods, if certain requirement has been fulfilled.