Malaysia import tax in 2026: duties, SST and how to calculate them

For any business that imports or exports regularly, understanding Malaysia’s import tax rules is essential for both compliance and profitability. This guide gives you a complete 2026 overview of Malaysia’s customs taxes, how to calculate your landed cost, the exemptions and schemes worth using, and the recent SST changes that are now in force.

Malaysia remains a strong trade hub, with consistent trade surpluses built on a wide network of free trade agreements, well-developed free trade zones and strategic shipping lanes linking ASEAN, China and beyond. Malaysia’s total trade continues to grow year on year, according to the Department of Statistics Malaysia, which makes getting your import costs right more valuable than ever.

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Import tax in Malaysia: the three core taxes

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

Import duty

What is it?
A tax charged as a percentage of the goods’ value, based on their HS code classification.

Rates:
Rates range from 0% to 60%, and some essential goods, such as certain medicines, are exempt. Many common e-commerce items, like electronics and fashion, carry a 0% duty rate, while protected or luxury goods can be much higher. You can check the rate for your product using the Royal Malaysian Customs HS Explorer at ezhs.customs.gov.my.

Sales Tax on Imports (SST)

Administered under the Sales Tax Act 2018, the Sales and Service Tax (SST) applies to most imported goods at one of two rates:

1️) Sales tax on taxable goods

• 5% on essential and near-essential goods, such as certain food products and construction materials
• 10% on standard consumer goods, such as electronics, clothing and appliances

Importantly, a 0% duty rate does not mean the goods are SST-free. Many goods carry 0% import duty but still attract 5% or 10% SST at the border.

Excise duty

Applied mainly to alcohol, tobacco, motor vehicles and luxury items, with rates set high to discourage consumption. In late 2025, excise on alcohol rose by 10% across the board.

How to calculate import tax in Malaysia

This is where many importers get caught out. Malaysia’s import taxes are calculated on the CIF value, not just the invoice price, and they are applied sequentially, so each tax compounds on the one before it.

CIF stands for Cost, Insurance and Freight, the total value of the goods including the purchase price, insurance and freight to the Malaysian port of entry.

The order is:

1. Import duty is calculated on the CIF value
2. Sales tax is calculated on the CIF value plus the import duty
3. Excise duty, if it applies, is added on top

Here is a worked example. A company imports machinery parts with a CIF value of RM50,000, at a 5% import duty rate and 10% SST:

• Import duty: 5% of RM50,000 = RM2,500
• SST: 10% of RM52,500, the CIF plus duty = RM5,250
• Total import taxes before clearance: RM7,750

Your total landed cost is then the CIF value, plus import duty, plus SST, plus any excise, plus courier or forwarding fees. Note that SST is a final cost, with no input tax credit, so build it into your pricing from the start. Sales tax on imports is collected by the Royal Malaysian Customs Department at the point of clearance, through the K1 customs declaration your forwarding agent submits.

Low-value goods: the 10% online import tax

Since 1 January 2024, imported goods sold online for RM500 or less, known as low-value goods or LVG, carry a flat 10% sales tax. This is collected by the registered seller or platform at checkout, not assessed at the border, and it still applies in 2026 at the same rate and threshold.

If your business sells more than RM500,000 of low-value goods a year to Malaysian customers, you must register for a Low-Value Goods Registration Number and collect the tax at the point of sale. Tobacco and alcohol are excluded from the LVG regime, as they already face duty, excise and sales tax through normal channels. For commercial consignments above RM500, the standard import duty and SST process applies at customs instead.

Import duty exemptions

Malaysia offers exemptions to support priority sectors, including:

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

Raw materials imported by licensed manufacturers, and machinery and equipment for manufacturing, can also qualify for sales tax exemption under Schedule C. You can apply for exemptions through 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:

Export incentives

To boost outbound trade, Malaysia offers incentives such as:

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.

The 2025 SST reform, now in force in 2026

Malaysia’s SST expansion, effective from 1 July 2025, brought over 4,800 additional goods and services into the tax net, moving thousands of previously zero-rated lines into the 5% or 10% bands. This is now fully enforced: the penalty-free transition period ended on 31 December 2025, and the Royal Malaysian Customs Department has applied penalties for incorrect declarations since 1 January 2026.

Key points for importers:

• Essentials such as chicken, fish, rice, milk, cooking oil, medicines and books remain at 0%
• Items like king crab, salmon, codfish, truffles, silk and industrial machinery moved to 5%
• Luxury goods such as racing bicycles and antique artworks are taxed at 10%
• After industry feedback, the Ministry of Finance exempted imported apples, oranges, mandarin oranges and dates from sales tax

The reform also expanded the service tax to new sectors. The standard service tax rate rose to 8% for many services from 1 March 2024, but logistics and freight services were kept at 6%, so expect a 6% service tax on your forwarding, haulage and warehousing invoices, which adds to your landed cost.

New for 2026: carbon tax and e-invoicing

Two further developments affect importers and exporters in 2026.

• Carbon tax: Malaysia is introducing levies on iron, steel and energy imports to support its green transition. Check the current scope and rates if you trade in these categories
• National e-invoicing: the LHDN e-invoicing rollout reached its next phase on 1 January 2026 for businesses with turnover between RM1 million and RM5 million, with a soft-landing period for consolidated e-invoices. Make sure your systems can capture the required fields, such as customer tax identification numbers

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, by receiving and holding funds in the currency you pay suppliers in
• Pay suppliers in USD, EUR or CNH, in their preferred currency, to build trust and negotiate better terms
• Simplify reconciliation, by managing all your currencies in one place for 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

For more, see our guide to cross-border payments in Malaysia, and if you source from China, our guide on how to send money to China.

Simplify your cross-border operations with WorldFirst

Malaysia is strengthening its role as a regional trade hub, and aligning your strategy with the latest import and export tax rules keeps you compliant and competitive. WorldFirst gives your business more control over international payments, from receiving payments to managing FX costs, all from one platform.

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FAQs

How much is import tax in Malaysia?

It depends on the goods. Import duty ranges from 0% to 60% based on the HS code, and most imports also carry sales tax of 5% or 10%. Some goods attract excise duty as well. Many e-commerce items have 0% duty but still pay 5% or 10% SST.

How do I calculate import tax in Malaysia?

Import tax is calculated on the CIF value, the cost of the goods plus insurance and freight, and applied in order. First, import duty on the CIF value, then sales tax on the CIF value plus the duty, then any excise. Your landed cost is the CIF value plus duty, SST, excise and forwarding fees.

What is SST on imports in Malaysia?

Sales tax is charged on most imported goods at 5% for essential and near-essential items, or 10% for standard goods, and is collected by customs at clearance. From July 2025, the scope expanded to over 4,800 more goods and services, now fully enforced in 2026.

Do I pay tax on online purchases into Malaysia?

Yes. Imported goods sold online for RM500 or less carry a flat 10% low-value goods sales tax, collected at checkout by the seller or platform. Goods above RM500 go through the standard import duty and SST process at customs.

Do I still pay SST if the import duty is 0%?

Often, yes. A 0% import duty rate does not exempt goods from sales tax, so many products with 0% duty still attract 5% or 10% SST at the border.

How can I reduce my import tax legally?

Use free trade agreements like AFTA, CPTPP or RCEP for preferential or 0% duty on qualifying goods, apply for exemptions on machinery and raw materials under Schedule C, and consider free trade zones or licensed manufacturing warehouses if you re-export.