► As a licensed manufacturer, do I enjoy any benefit?
Yes, you are entitled to tax-free materials. Licensed manufacturers who
require taxable materials and component parts for manufacturing purposes are
able to import them or purchase them from other licensed manufacturers free of
sales tax with the approval and authorisation of the Sales Tax office at the
Customs Department.
► What is Sales Tax?
It is a tax imposed on certain imported goods. It is also imposed on
certain locally- manufactured goods. It is an ad valorem single-stage tax and
the rate is 10% on the value of the goods. For imported goods, the tax is
assessed and payable at the time the goods are cleared from Customs Control.
For locally manufactured goods, the tax is to be charged by the licensed
manufacturers at the time the goods are sold. The amount of tax charged is to
be shown separately on the customer’s invoice.
Not all goods are subject to sales tax. There are exempted goods. The
relevant legislation is the Sales tax Act of 1972 and its regulations. As such,
manufacturers of taxable goods, i.e. subject to sales tax are required by law
to be licensed and to change 10% tax at the time the goods are sold.
However, if any manufacturer of taxable goods does not exceed RM
100,000.00(threshold) on his sales turnover per annum he may apply for a
certificate of exemption from licensing at the nearest Custom office.
► Is it an offence for manufacturing goods subject to sales tax without a license or without a certificate of exemption from licensing?
Yes.
► Who is a Sales Tax Licensee?
Any manufacturer who is manufacturing goods subject to Sales Tax and bylaw is required to collect the Sales Tax from the consumer like an agent for the government.
► It is often said that there is some facilitation given to licensed sales tax-goods manufacturers. Is it true?
Yes, if they require taxable raw materials and component parts used in the manufacturing process, they are entitled to import them or purchase them from other licensed manufacturers free of sales tax but with the approval of the local sales tax office at the Royal Customs Department.
► Do manufacturers of taxable goods but not exceeding the threshold need to be licensed too?
By law, they are required to apply for the exemption and would be issued certificate of exemption from being licensed and only then, they are permitted not to impose the sales tax of 10%. It is also an offence without this certificate of exemption.
► Can a small-time manufacturer of sales taxable goods be exempted?
Yes, as long as he does not exceed RM 100,000.00 on the sales turnover per annum. However, he is required by law to apply for a certificate of exemption from licensing.
► How are locally-manufactured goods subject to sales tax?
Only those goods manufactured locally which fall within the category of the taxable goods under the Sales Tax Act. However, the annual sales turn-over of such goods should exceed RM100,000.00. This category of manufacturers by law is required to be licensed which authorizes them to charge and collect 10% sales tax from the customers. It is an offence for not having a license.
► How is an importer subjected to sales tax?
Sales tax is imposed on goods imported which are taxable under the Sales Tax Act. He has to check whether the goods he is importing falls within the category of taxable goods which generally carries a tax rate of 10% on the taxable value. Some goods are exempted from sales tax.
► Who are subjected to the imposition of sales tax?
2 groups of businessmen: importers of goods (traders) and manufacturers of goods in the country
