Currently, there is no Goods and Services Tax (GST) regime in Malaysia yet. However, Malaysian Government has progressed towards implementing GST in the near future. This is evidenced through the tabling of the GST Bill 2009 in Parliament for first reading in December 2009. The second reading of the bill has been postponed to enable the Malaysian government to raise public awareness of the need for GST. As part of preparation for GST, the Malaysian Government has approved Price Control and Anti Profiteering Act 2010 ("PCAPA") to control the price of goods and services as well as prohibit people from profiteering. The PCAPA is effective from 1 April 2011.
In place of GST, Malaysia currently has 2 other form of consumption taxes, mainly sales tax and service tax. Sales tax is a single stage tax imposed on taxable goods imported into or manufactured in Malaysia. Broadly, the rates are nil, 5% and 10% depending on the tariff code classification of the goods. Fruits, certain foodstuff, alcoholic drinks and cigarettes are subject to 5%. All other goods, which are not specifically exempted, are subject to sales tax at 10 percent.
Sales tax is calculated as follows:
(CIF + import duty + excise duty) X sales tax rate percentage
Service tax is charged on taxable services provided by taxable persons. Beginning 1 January 2011, the rate of service tax is 6% of the price, charge or premium of the taxable service. Examples of taxable services are management and consultancy services.
Malaysia also imposes import duties, excise duties and export duties. Generally, import duties are levied on certain goods imported into Malaysia. Import duties are payable at the time of clearance from Customs control, unless the importer enjoys an exemption. Generally, the rates of import duties range from nil to 50%. Raw materials, machinery, essential foodstuffs and pharmaceutical products are generally non-dutiable or subject to duties at lower rates.
Export duties are generally imposed on Malaysia's main commodities such as crude petroleum and crude palm oil. Export duties are payable at the time of export. Crude petroleum oil is subject to duty at a flat rate of 10%, while crude palm oil is based on scaled rates on gazetted value. This means that the duty on such commodity is only imposed on the excess of a threshold price which reflects the cost of production of the commodity. No export duties are collected when the price of the commodity falls below the threshold.
Excise duties are levied on a selected range of goods that are imported or manufactured in Malaysia. Goods that are subject to excise duty include beer, other intoxicating liquors, cigarettes, playing cards and motorcars. The rates of excise duties vary for each 'excisable' product. For example, motorcars (depending on the engine capacity) are subject to excise duty ranges from 60% to 105%.