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Understanding Malaysia’s Import & Export Duties in 2025

Last update: September 23, 2025

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For businesses that regularly import or export, understanding Malaysia’s export and import tax policies is critical for compliance and profitability.

Below, you’ll find a complete overview of Malaysia’s customs taxes, incentives, SST reforms, and actionable tips to streamline operations.

Why Malaysia is a thriving import-export hub

Malaysia continues to record consistent trade surpluses, driven by:

A network of Free Trade Agreements (FTAs)
Well-developed Free Trade Zones (FTZs) and infrastructure
Strategic shipping lanes connecting ASEAN, China and beyond

These advantages have made it a preferred location for manufacturers, traders and e-commerce exporters.

Import tax Malaysia

When bringing goods into Malaysia, you must account for three core taxes:

Import duty

What is it?
A tax imposed as a percentage of the imported goods’ value.

Rates:
0%–60%, depending on the HS Code classification. Some essential goods (e.g., medicines) are exempt.

Sales Tax on Imports (SST)

Administered under the Sales Tax Act 2018, the Sales and Service Tax (SST) has two primary components:

1️) Sales tax on taxable goods

5%: Essential products (e.g., food staples)
10%: Consumer goods (electronics, clothing, appliances)

2) Sales tax on Low-Value Goods (LVG)

Flat 10%: Online imports valued under RM500

Excise duty

Applied mainly to:

Alcohol
Tobacco
Luxury items

Rates vary by product and are typically higher to discourage consumption.

Import duty exemptions

Malaysia offers exemptions to support priority sectors, including:

Renewable energy equipment
Medical devices
Educational materials
Machinery and raw materials for manufacturing

You can apply for exemptions via the Ministry of Finance or the Royal Malaysian Customs.

Export duty in Malaysia

Most exported goods are not taxed. However, specific raw or unprocessed materials are subject to export duties, including:

Exported Goods	Duty Rate
Crude petroleum	5%–20%
Palm oil	5%–20%
Live animals	5%–20%
Palm nuts	5%–20%
Bamboo and rattan	5%–20%
Certain metals and ores	5%–20%

Export incentives

To boost outbound trade, Malaysia offers incentives such as:

Incentive	Conditions	Benefit
MITC	60% Malaysian ownership, RM10M+ sales	20% tax exemption on increased exports for 5 years
Normal AIE	Export-focused manufacturers	10–15% exemption based on value-add
Enhanced AIE	Higher export growth	Up to 100% exemption for top performers
Promotion of exports	Manufacturers or agricultural exporters	Double deduction on export-related expenses

Special schemes for international trade in Malaysia: FTAs, FTZs, and LMWs

The Malaysian government offers several schemes to help companies involved in import and export boost profitability in international trade:

Free Trade Agreements (FTAs):

ASEAN Free Trade Area (AFTA): AFTA eliminates tariffs between ASEAN member states, making it cheaper and faster to trade within Southeast Asia. Malaysian exporters and importers benefit from preferential tariff rates and simpler customs procedures.
Malaysia–Singapore FTA: A bilateral agreement reducing tariffs and non-tariff barriers between Malaysia and Singapore. It promotes smoother trade flows, investment opportunities, and better market access for businesses on both sides of the Causeway.
CPTPP: A high-standard trade pact linking 11 economies across Asia-Pacific and the Americas, including Japan, Australia and Canada. It offers reduced tariffs, greater market access and clear rules on e-commerce and intellectual property.

Free Trade Zones (FTZs):

FTZs are specific zones, usually located at borders or major trading ports, where businesses are exempt from taxes and import/export duties. They may even enjoy special incentives aimed at encouraging cross-border trade.

No import duties if goods are re-exported: Goods brought into an FTZ can be stored, processed, or assembled without paying import duties, as long as they’re shipped out of Malaysia afterwards.
Suitable for assembly, warehousing, and repackaging: FTZs are designed for businesses needing bonded storage, light manufacturing, or repackaging activities, making them ideal for exporters managing complex supply chains.

Major Free Trade Zones in Malaysia:

Port Klang Free Zone (PKFZ)
Selangor – One of the largest integrated FTZs, popular for logistics, manufacturing and transshipment.
Bayan Lepas Free Industrial Zone
Penang – A well-known electronics and semiconductor hub, ideal for assembly and export manufacturing.
Johor Port Free Zone
Johor – Strategically located near Singapore, widely used for warehousing, distribution and petrochemical storage.
Tanjung Pelepas Free Zone
Johor – Adjacent to Port of Tanjung Pelepas, suited for transhipment and logistics activities.
Pasir Gudang Free Zone
Johor – Industrial and manufacturing zone close to Johor Port, used for heavy industries and re-export.
Senai Airport Free Industrial Zone
Johor – Next to Senai International Airport, convenient for air freight and electronics assembly.
Bukit Kayu Hitam Free Commercial Zone
Kedah – Near the Thai border, facilitating cross-border trade and warehousing.
Port of Tanjung Emas Free Zone
Johor – Serving shipping, storage and export-oriented businesses.
Kuala Lumpur International Airport (KLIA) Free Commercial Zone
Selangor – Focused on air cargo, transshipment and distribution centres.

Licensed Manufacturing Warehouses (LMWs):

LMWs let manufacturers bring in raw materials, components or machinery without paying import duties or taxes upfront. Duties only apply when finished goods leave the warehouse for the Malaysian market. This allows businesses to improve their cash flow and manage costs effectively.

Major SST reform effective 1 July 2025

Malaysia’s 2025 budget has introduced a major SST overhaul that affects importers, exporters and local businesses – especially businesses involved in the import of luxury items. These include (but aren’t limited to): premium food like king crab and salmon, truffle, or caviar; fashion items like shoes and bags; artwork like paintings and sculptures; and other lifestyle and non-essential items.

Certain service sectors are also affected by new service tax rates.

New sales tax rates

Remain at 0%:

Chicken, fish, rice, milk, cooking oil, noodles, medicines, books, agricultural inputs

5% tax:

King crab, salmon, codfish, truffles, silk, imported fruits (except apples and oranges), essential oils, industrial machinery

10% tax:

Luxury goods such as racing bicycles and antique artworks

New service tax rates: 6 newly taxable sectors

Sector	Rate	Threshold	Key Exemptions
Leasing & rental services	8%	RM1,000,000	Residential property, B2B services, non-reviewable contracts (12m)
Construction services	6%	RM1,500,000	Residential, B2B, non-reviewable contracts
Fee-based financial services	8%	RM1,000,000	Core banking, Islamic finance, FX, remittance fees
Private healthcare services	6%	RM1,500,000	Services to Malaysian citizens
Private education services	6%	N/A	Malaysian students, services for persons with disabilities (OKU)

Government support measures

Grace period until 31 December 2025 (no penalties)
Exemptions for micro and small enterprises below revenue thresholds
Relief for B2B and intra-group services to avoid double taxation
12-month exemption for non-reviewable contracts

For more information on SST, visit their website

How to manage cross-border payments

With new taxes and SST reforms putting pressure on cash flow, payment efficiency matters more than ever. Here are some best practices to help your business manage the impact:

Use a multi-currency account for business to:
Avoid double conversions: Receive and hold payments in the currency you pay to suppliers and avoid the extra currency conversion costs
Pay suppliers in USD, EUR, or CNY: Settle invoices in your supplier’s preferred currency to build trust and negotiate better terms
Simplify reconciliation: Manage all your currencies in one account so you have a clear view of cash flow
Use platforms like WorldFirst that offer cross-border payments in Malaysia to:
Access competitive FX rates: Protect your margins with real-time exchange rates and transparent fees
Schedule automatic transfers: Never miss a supplier deadline and reduce your payment admin
Track spend across currencies: Get visibility on every transaction to make better business decisions
Stay on top of import/export duties to ensure accurate pricing and avoid compliance issues

Malaysia is strengthening its role as a regional trade hub. Aligning your strategy with the latest regulations on import and export duties, as well as other forms of taxation, will help you stay compliant and thrive in a fast-changing market.

Ready to simplify your cross-border operations?

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