Indirect Tax Alert
Stay updated
Issue No. 18/2025 | 1 October 2025
Sales Tax Exemptions – Sales Tax Policy No. 1, 2 and 3 of 2025 and Revised Guide on Sales Tax Exemptions Under Schedule A, Sales Tax (Persons Exempted from Payment of Tax) Order 2018
The Royal Malaysian Customs Department (RMCD) recently issued the following sales tax policies:
- Sales Tax Policy No. 1/2025 – Exemption on Motorcycles dated 27 September 2025
- Sales Tax Policy No. 2/2025 – Exemption on Importation of Soya Beans dated 27 September 2025
- Sales Tax Policy No. 3/2025 – Exemption on Raw Materials, Components, Packing And Packaging Materials, Manufacturing Aids, And Cleanroom Equipment dated 29 September 2025
RMCD has announced in the above sales tax policies that the Minister of Finance (MOF) has granted sales tax exemptions as below:
1. Sales Tax Policy No. 1/2025 – Exemption on Motorcycles
Motorcycles that are imported or manufactured by a registered manufacturer with the tariff codes of 8711.20.96 00 and 8711.20.99 00 are exempt from sales tax with effect from 27 September 2025.
2. Sales Tax Policy No. 2/2025 – Exemption on Importation of Soya Beans
- Importation of soya beans with the tariff code heading of 12.01 are exempt from sales tax with effect from 1 July 2025.
- MOF has also approved the refund of sales tax on the importation of soya beans with the above tariff code heading to any person who has made payment of the sales tax subject to the conditions under section 39 of the Sales Tax Act 2018.
- Applications for refund of sales tax paid must be made using Form JKDM No. 2 and submitted to the Technical Services Division of RMCD at the respective state office no later than 30 November 2025.
3. Sales Tax Policy No. 3/2025 – Exemption on Raw Materials, Components, Packing And Packaging Materials, Manufacturing Aids, And Cleanroom Equipment
- Exemptions are granted for raw materials, components, packing and packaging materials, manufacturing aids and cleanroom equipment that are imported or purchased from a registered manufacturer by any manufacturer manufactured goods that were exempt from sales tax before 1 July 2025 and became taxable goods on 1 July 2025.
- MOF has also approved the refund of sales tax paid on raw materials, components, packing and packaging materials, manufacturing aids and cleanroom equipment used in the manufacturing of taxable goods.
- The conditions for the refund are as follows:
- The manufacturer has applied for registration as a registered manufacturer no later than 31 August 2025;
- Importation or purchase from a registered manufacturer was made from 1 July 2025 to 31 August 2025;
- Sales tax has been paid; and
- The goods are still under the manufacturer’s control.
- Manufacturers who have been approved for refund of sales tax are subject to the exemption conditions under the Sales Tax (Persons Exempted from Payment of Tax) Order 2018.
- The applications for refund must be submitted using JKDM No. 2 form to the Revenue Accounting Branch, Technical Services Division of RMCD at the respective state office no later than 30 November 2025.
RMCD has also issued the revised Guide on Sales Tax Exemption under Item 33A, 33B, 55, 63, 64 & 65, Schedule A, Sales Tax (Persons Exempted from Payment of Tax) Order 2018 dated 26 September 2025 to replace the previous guide dated 25 April 2025.
The following 2 amendments were made in Appendix 1 of the revised guide:
- Additional sub-headings and tariff codes of machinery, equipment and spare parts have been inserted into the schedule 1 of the Appendix 1. These additional sub-headings and tariff codes of machinery, equipment and spare parts are shaded in dark blue.
- The Note 1 in the Appendix 1 of the previous guide which stated that “Permission to claim an exemption can be granted if the customs officer can verify and be satisfied that the goods are directly used in the company's finished goods manufacturing process.” has been deleted.
PwC Comment
MOF has granted various sales tax exemptions as stated in the above 3 sales tax policies. As the effective date for some of the exemptions is retrospectively set to 1 July 2025, MOF has also allowed refund of sales tax paid on those items subject to the conditions being fulfilled. However, RMCD has set the deadline for applications for refund of sales tax paid to be 30 November 2025.
If you have any enquiries on the above sales tax exemptions or your business needs any assistance in applying for refund of sales tax paid, please do not hesitate to contact us and we would be happy to assist you.
Contact us
© 2025 PwC. All rights reserved. "PricewaterhouseCoopers" and/or "PwC" refers to the individual members of the PricewaterhouseCoopers organisation in Malaysia, each of which is a separate and independent legal entity. Please see www.pwc.com/structure for further details. Read about our commitment to your privacy here.