Customs (Prohibition of Exports) (Amendment) (No.2) Order 2013 [P.U. (A) 235/2013]

Further to our e-CTIM No.12/2013 dated 21 January 2013, please be informed that the Customs (Prohibition of Exports) (Amendment) (No.2) Order 2013 [P.U. (A) 235/2013] was gazetted on 22 July 2013 and comes into operation on 23 July 2013.

Amendment – Part I of the Third Schedule of the Customs (Prohibition of Exports) Order 2012 [P.U. (A) 491/2012] is amended by inserting (after item 37) a new item “Rubber and rubber products”.

Members may view the Order from the Attorney-General’s Chambers website for details of the item.

Customs-Private Sector Consultative Panel (CPSCP) Meeting No.1-2013

Representatives from the Institute’s Technical Committee-Indirect Tax (TC-IT) attended the Customs-Private Sector Consultative Panel (CPSCP) Meeting No.1-2013 held recently. We are pleased to update members on some of the issues discussed during the meeting:-

1)    The Practice of Standard Procedures by Customs Officers

The meeting was informed that the practice of standard procedures of the Royal Malaysia Customs (RMC) varies from one customs station to another and sometimes among officers of the same Customs station. It was suggested the all procedures and compliance requirements be made transparent to the public and a special officer be assigned to attend to public enquiries on issues relating to the standard practice and procedures.

The RMC clarified that directions to all Customs officers have been issued through Customs Rulings, Administrative Circulars and Client Charter to ensure uniformity of implementation.

The Meeting decided that all compliance requirements and the format of form to be used in dealings with the RMC should be uniform in all Customs stations in the country and will be uploaded onto the RMC website. Standard Operating Procedure will be prepared for all Customs officers. The RMC will inform the coming Customs Directors Meeting No.72 of the issue and decision.

2)    Sales Tax and Service Tax Audit Framework

With the impending Goods and Services Tax (GST), the Customs has been stepping up the sales tax and service tax audits. The audit will generally cover a period of 3 years from the date of the audit and the licencees are normally given 14 days to submit their records and books of account.

CTIM has proposed that, to ease the audit process and avoid misunderstanding, an audit framework for sales tax and service tax audit should be drawn up by Customs with input from the practitioners and it should be made available to the public. Sales tax and service tax licencees need to know the areas that will be covered during the audits and how to prepare documentation and information that will be relevant to the audits.

The Customs has responded that, unlike for income tax where audit is separated from investigation, a sales tax and service tax audit is a hybrid of audit and investigation. There may be a situation when Customs may turn an audit into investigation without prior notice. Customs will prepare an Audit Framework for licencees’ reference and upload it to the Customs’ website in due course.

3)    Vendor applying for refund under Section 31 of Sales Tax Act, 1972

Generally, when a vendor purchases locally manufactured goods from a licensed manufacturer, he would have paid the sales tax. If he subsequently sells the goods to a licensed manufacturer who has the approval of the Director General through CJ5 to purchase the goods for manufacturing purpose, he may apply for a refund of the sales tax by submitting the relevant documents such as JKED2, licensed manufacturer CJ5, to prove that sales tax had previously been paid etc.

In practice, for reasons of confidentiality, the vendor is unable to produce the sales tax bimonthly return (CJP1) to prove that sales tax had previously been paid, as this document belongs to the licensed manufacturer who paid the sales tax.

CTIM has proposed that since the vendor has no authority over the bimonthly return (CJP1), it would be more appropriate for the Customs to verify the claims with the licensed manufacturer. It is suggested that perhaps the vendor needs to provide the customs with a copy of the invoice for further action by the Customs.

Customs is in agreement with CTIM’s view and informed that this might be an additional requirement requested by the state offices but not as instructed by the Customs’ head office. The vendor may write to the respective state Customs’ Director on the matter.

4)    Application for CJ5 under Sales Tax

Presently a Sales Tax-licensed manufacturer is required to apply for CJ5 on a yearly basis or upon the expiry of the amount approved. It was proposed that a “one-time approval” be granted in respect of CJ5 at the time of issuance of the Sales Tax licence as the manufacturer is required to submit the list of raw materials upon application for the licence.

The Customs has responded that the existing procedure of granting approval for a period of 1 year only, will continue to be practised. The proposal for the “one-time approval” may not be implemented for the time being due to the impending GST implementation.

5)    One Stop Centre for All Customs’ Declarations in Port Klang

Currently there are separate Customs Stations at Northport, Westport, South Point and Free Zone, posing a constraint on deployment of Customs personnel. In addition, there are different standards for Bank Guarantees at Northport and Westport. It is proposed that all Customs’ declaration (K1, K2, K3 and K8) be made at one single location (One Stop Centre) in Port Klang.

The Meeting agreed with the proposal and will discuss with the Selangor Customs Director on the relevant Standard Operating Procedure.

For more information, members may view the Minutes of CPSCP Meeting No.1/2013 at our website.

Stamp Duty (Exemption) (No.4) Order 2013 [P.U. (A) 52/2013]

The Order exempts an instrument relating to the sale and purchase of retail debenture and retail sukuk as approved by the Securities Comission under the Capital Markets and Services Act 2007 [Act 671] and executed, by a retail investor, who is an individual, on or after 1 October 2012 but not later than 31 December 2015 from stamp duty.

A “retail debenture” has the same meaning assigned to the definition of “debenture” in the Capital Markets and Services Act 2007; and a “retail rukuk” has the same meaning as provided in the guidelines relating to sukuk issued by the Securities Comission under the Capital Markets and Services Act 2007. It includes any debenture/sukuk that is proposed to be issued or offered to a retail investor and includes a debenture/sukuk where an invitation to subscribe or purchase of the debenture is proposed to be issued to the retail investor.

A “retail investor” shall be any person other than:-

(a) the Central Bank of Malaysia established under the Central Bank of Malaysia Act 2009 [Act701];

(b) a person to whom an excluded offer or excluded invitation is made as specified in Part A of Schedule 6 to the Capital Markets and Services Act 2007; and

(c) a person to whom an excluded issue is made as specified in Part A of Schedule 7 to the Capital Markets and Services Act 2007.

The legislation can be viewed from the Attorney-General’s Chambers website.

List of Taxable and Non-taxable Items under Second Schedule to the Service Tax Regulations, 1975

Please be informed that the Royal Malaysian Customs (RMC) has recently updated the List of Taxable and Non-taxable Items under Second Schedule to the Service Tax Regulations 1975, with extensive changes for services under Group A, B1, B2, C, D, E, E1, F and G of the Second Schedule to the Service Tax Regulations, 1975.

Members are advised to study the updated list carefully which is available at RMC website.

Customs (Prohibition of Imports) Order 2012 [P.U. (A) 490/2012]

1)        Customs (Prohibition of Imports) Order 2012 [P.U. (A) 490/2012]

The Order which comes into operation on 1 March 2013 provides details of goods prohibited from being imported. Further information, including description of goods, countries involved and manner of import are explained in the following Schedules:-

Item No.	Schedule	Details
i.	First Schedule	Goods the import of which is absolutely prohibited.
ii.	Part I of the Second Schedule	Goods which may not be imported into Malaysia except under an Import Licence.
Iii	Part II of the Second Schedule	Goods which may not be imported into Malaysia except under an Import Licence and shall not apply to the specified free zones.
iv.	Part III of the Second Schedule	Goods which may not be imported into Malaysia except under an Import Licence and shall not apply to Labuan, Langkawi and Tioman and the specified free zones.
v.	Part I of the Third Schedule	Goods which may not be imported into Malaysia except in the manner provided.
vi.	Part II of the Third Schedule	Goods which may not be imported into Malaysia except in the manner provided and shall not apply to the free commercial zones.
vii.	Part III of the Third Schedule	Goods which may not be imported into Malaysia except in the manner provided and applicable to goods in transit controlled under the International Trade In Endangered Species Act 2008 [Act 686].
viii.	Part I of the Fourth Schedule	Goods which may not be imported into Malaysia except confirming to the Malaysian standards and / or other standards approved by the Malaysian Authorities and in the manner provided.
ix.	Part II of the Fourth Schedule	Goods which may not be imported into Malaysia except confirming to the Malaysian standards and / or other standards approved by the Malaysian Authorities and in the manner provided and does not apply to the free commercial zones.

The Customs (Prohibition of Import) Order 2008 [P.U. (A) 86/2008] is revoked.

For further details, members may view the Order.

2)        Customs (Prohibition of Exports) Order 2012 [P.U. (A) 491/2012]

The Order which comes into operation on 1 March 2013 provides details of goods prohibited from being exported.  Further information, including description of goods, destinations and manner of export are explained in the following Schedules:-

Item No.	Schedule	Details
i.	First Schedule	Goods the export of which is absolutely prohibited.
ii.	Second Schedule	Goods which may not be exported except under an Export Licence.
iii.	Part I of the Third Schedule	Goods which may not be exported except in the manner provided.
iv.	Part II of the Third Schedule	Goods which may not be exported except in the manner provided for goods controlled under the International Trade In Endangered Species Act 2008 [Act 686].

For further details, members may view the Order. 

MINUTES OF THE CUSTOMS-PRIVATE SECTOR CONSULTATIVE PANEL (CPSCP) MEETING NO. 1/2012 ON 2 MAY 2012 WITH THE ROYAL MALAYSIAN CUSTOMS (RMC)

Further to the Customs-Private Sector Consultative Panel Meeting No.1/2012 held on 2 May 2012, with the Royal Malaysia Customs (RMC), please be informed that members may now view the minutes of the above meeting at the Institute’s website.

Some of the new important issues discussed during the said meeting have been highlighted in agenda 7 of the above minutes and are listed below:-

• Sales Tax and / or Duties for Spare Parts of Machineries
• Customs Procedure - from Port Sepanggar to Tanjung Aru,Sabah
• One Single Customs Station Code for Port Klang
• Deconsolidation Activity at Public Bonded Warehouse
• Compound for Mistakes by Freight Forwarders
• Advance Manifest Declaration
• Red Files System for Customs Assessment
• Customs Clearance-K8 Normal Cargo at Westport and K8 critical cargo at PKFZ
• Government Departments do not Apply for CJ(P)2
• Service Tax Chargeable on Employment Service


For further details, members may refer to the above-mentioned minutes of meeting.

Appointment of Director General of the Royal Malaysian Customs

Please be informed that YBhg Dato’ Khazali Bin Hj. Ahmad has been appointed as the Director General of the Royal Malaysian Customs commencing on Friday, 22 June 2012. Prior to his appointment, YBhg Dato’ Khazali was Sabah Federal Secretary. YBhg Dato’ joined the Administrative and Diplomatic Service in Dec 1, 1981 and was Customs Deputy Director-General (management) before appointed as Sabah Federal Secretary.

Goods and Services Tax (GST) Draft Guide – Registration

Please be informed that the Royal Malaysian Customs (RMC) has recently issued a draft Goods and Services Tax (GST) Registration Guide.

To provide better support on indirect taxation, the Institute has recently set-up the Technical Committee – Indirect Tax (TC-IT) to look into matters relating to indirect taxation. The TC-IT is currently studying the above guide and will provide feedback to the RMC, where necessary.

In this connection, members are invited to provide feedback and comments, in writing, to the Institute at nadia@ctim.org.my, kslim@ctim.org.my or secretariat@ctim.org.my by 3 July 2012.

Customs Appeal Tribunal (CAT) – Road Show

The Customs Appeal Tribunal (CAT) was established on 1 Jun 2007 to provide an avenue for appeal against the decision of the Director General of Customs and Excise relating to the Customs Act 1967, Excise Act 1976, Sales Tax 1972 and Services Tax Act 1975. It regularly organises road shows to explain its role and functions as well as procedures for appeal.

CTIM has been invited to send 5 members to attend the Road Show, the details of which are as follows:

Date : 23 May 2012 (Wednesday)
Time : 9.00 a.m. – 11.00 a.m.

Venue :-
Bilik Mesyuarat Utama TRK
Aras 4, Perbendaharaan 2,
No.7, Persiaran Perdana,
62592 Putrajaya.

The Institute encourages members who provide indirect taxation services to attend the briefing.

Members interested in participating in the Road Show may register with the Institute on a first-come first-served basis.

Survey: Goods and Services Tax (GST) – Business Readiness

The Ministry of Finance (MOF) is making preparations for the implementation of the Goods and Services Tax (GST).

To ensure organised, efficient and proper implementation, the Tax Review Panel of the MOF is collecting feedback on the readiness of the industries/businesses towards the implementation of GST, particularly in respect of human resource requirements, training, computer cost and system determination, and the need for any assistance, before the implementation of GST later.

Members are encouraged to make time to complete the attached survey form, provided by MOF, and return it to the CTIM Secretariat on or before 12 April 2012. The feedback is invaluable as it would affect policy decisions.



CTIM will present your feedback to MOF at a meeting to be convened by MOF soon on the matter.



CTIM greatly appreciates the attention and cooperation of its members in taking part in the survey.



For your convenience, please scan your response (the completed survey form) and email to

kim@ctim.org.my, or Nadia@ctim.org.my, or Yamuna@ctim.org.my or fax to 03-2162 8990 or 03-2161 3207.

Stamp Duty (Remission) Order 2012 [P.U. (A) 8/2012]

This order is on the remission of the amount of stamp duty chargeable (i.e. excess of RM50.00) under subitem 32(a) of the First Schedule to the Stamp Act 1949 on an instrument of deed of assignment executed between a contractor and subcontractor pursuant to Dasar Pengagihan Kerja kepada Kontraktor Bumiputera Kelas E and F and it is deemed to have come into operation on 1 May 2011.

Real Property Gains Tax (Exemption) Order 2011 [P.U. (A) 434/2011]

In Paragraph 37 of the 2012 Budget Speech it was proposed that the RPGT rates on the gains from the disposal of properties commencing from 1 January 2012 be reviewed.

This order exempts any person from the payment of tax on the chargeable gain in respect of any disposal of a chargeable asset on or after 1 January 2012, on the condition that the amount of chargeable gain shall be determined by a formula provided.

Effectively, the order states that the rates of Real Property Gains Tax (RPGT) are as indicated in the table below:

	Holding Period	RPGT Rates
i)	Up to 2 years	10 %
ii)	Exceeding 2 until 5 years	5 %
iii)	Exceeding 5 years	0 %

The Real Property Gains Tax Act (Exemption) (No.2) 2009 [P.U. (A) 486/2009] published on 30 December 2009 is revoked.

Direct Taxation

1. Stamp Duty (Exemption) (No.3) Order 2011 [P.U. (A) 441/2011]

In Paragraphs 76, 77 and 78 of the 2012 Budget Speech and Appendix, 1 it was proposed that a full stamp duty exemption be given on loan agreements for the purchase of residential properties priced up to RM300,000 under the PR1MA Scheme.

Further to this, any residential property purchased from PR1MA Corporation Malaysia is exempted from stamp duty, provided that the Sale and Purchase Agreement is executed on or after 1 January 2012 but not later than 31 December 2016, and the application for exemption is only made once.

The Order exempts the purchaser, named in the Sale and Purchase Agreement, from stamp duty in respect of any loan agreement executed between the purchase and the following:-

a) a bank, financial institution, insurance company or co-operative society;

b) an employer under an employee housing loan scheme; or

c) PR1MA Corporation Malaysia,

Purchaser means:

i) an individual Malaysian citizen

ii) a person eligible to purchase residential property under the Perumahan Rakyat 1Malaysia (i.e. middle income group)

Residential property means:-

i) a house

ii) a condominium unit

iii) an apartment

iv) a flat



built as a dwelling house costing not more than RM300,000 under the Perumahan Rakyat 1Malaysia programme.



2. Stamp Duty (Exemption) (No.4) Order 2011 [P.U. (A) 446/2011]

Appendix 16 of the 2012 Budget proposed that a 100% stamp duty exemption be given on loan agreements of up to RM50,000 under the Micro Financing Scheme. Such exemption is given on loans executed between micro enterprises and SMEs with any banking and financial institution.

Further to this, the Order exempts from stamp duty, the instrument of agreement for a loan or financing, pursuant to a micro financing scheme approved by the National Small and Medium Enterprise Development Council, for an amount not exceeding RM50,000 between a borrower and a participating bank or financial institution. The exemption applies to instruments or agreements for loans executed on or after 1 January 2012.



3. Stamp Duty (Exemption) (No.5) Order 2011 [P.U. (A) 447/2011]

In the second measure under Paragraph 47 of the 2012 Budget Speech, and Appendix 16, it was proposed that a 100% stamp duty exemption be given on loan agreements of up to RM50,000 undertaken from the Professional Services Fund. Such exemption is given on loans executed between any professional (such as accountant, doctor and lawyer) with Bank Simpanan Nasional.

Further to this, the Order exempts from stamp duty, all loan or financing instruments, in relation to the Professional Service Fund, for an amount not exceeding RM50,000, between a borrower and Bank Simpanan Nasional, executed on or after 1 January 2012

Indirect Taxation

1. Customs (Prohibition of Imports) (Amendment) (No.4) Order 2011 [P.U. (A) 437/2011]



This Order seeks to amend the Customs (Prohibition of Imports) Order 2008 [P.U. (A) 86/2008] in respect of the First, Second, Third and Fourth Schedules with effect from 1 January 2012.



2. Customs (Prohibition of Exports) (Amendment) (No.2) Order 2011 [P.U. (A) 438/2011]



This Order seeks to amend the Customs (Prohibition of Exports) Order 2008 [P.U. (A) 87/2008] in respect of the Second Schedule and Third Schedule with effect from 1 January 2012.



3. Customs Duties (Amendment) Order 2011 [P.U. (A) 439/2011]



This Order seeks to amend the Customs Duties Order 2007 [P.U. (A) 441/2007] in respect of the First Schedule with effect from 1 January 2012.

Relocation of Headquarters of Internal Tax Division

Please be informed that the Headquarters of the Internal Tax Division will be fully operational on 12 December 2011 at the new address below:-

Jabatan Kastam Diraja Malaysia,

Bahagian Cukai Dalam Negeri,

Aras 3 & 4, No.22, Menara A,

Bangunan Boulevard Square,

Persiaran Perdana, Precint 3,

62100 Putrajaya.

The location of the branches is as follows:-

Level 3

-           Policy & Implementation Branch

-           Industry, Petroleum & Gas Branch

Level 4

-           Customs Director’s Office

-           Management & Collection Branch

-           Facilities Control and Consultation Branch

Service Tax Treatment for Free Zones, Tax-Free Islands and Joint Development Areas

The Ministry of Finance (MOF) has, in a letter to the Director General of the Customs and Excise, dated 14 November 2011, invoked Section 6 of the Service Tax Act, 1975 to exempt Service Tax under the following circumstances:

(a)      Exemption of Service Tax with effect from 1 January 2012

(i)        All taxable services provided by persons in Free Zones and supplied to persons in Free Zones

(ii)       All taxable services provided by persons in Free Zones and supplied to persons in Principal Customs Area

(iii)      All taxable services provided by persons in Principal Customs Area and supplied to persons in Free Zones

(iv)     All taxable services provided by persons in Principal Customs Area or Free Zones in relation to matters in Langkawi, Tioman, Labuan and Joint Development Areas.

(b)      Refund of Service Tax Paid

In connection with (a) above, where the tax charged has been paid before 1 January 2012, any application for service tax refund will not be approved.

(c)      Remission of Service Tax Uncollected

Any service tax, in respect of the services mentioned in (a) above, which has not been collected before 1 January 2012, is remitted under Section 22 of the Service Tax Act, 1975

(d)      Services Not Subject to Service Tax

(i)        All taxable services provided by persons in Free Zones and supplied to persons in Langkawi, Tioman, Labuan and Joint Development Areas, and

(ii)       All taxable services provided by persons in Principal Customs Area and supplied to persons in Langkawi, Tioman, Labuan and Joint Development Areas

(e)      Exemption Granted Until the Introduction of Goods and Services Tax.

Meanwhile, members view the MOF letter on our website.  You may also get further information on the matter from the Royal Malaysian Customs website soon.

Service tax -- Customs Positive and Negative List for service tax

The Royal Malaysian Customs (RMC) has recently issued a revised “Positive and Negative List” for the purpose of service tax.  Members may view the revised list at the website of the Institute at http://www.ctim.org.my/technical_techdev_indirect.asp or at the website of the RMC at http://www.customs.gov.my/index.php/bm/component/content/article/193

GST Guides (Draft)

The Royal Malaysian Customs (RMC) has released the following GST Guides (draft) on the GST Portal (http://www.gst.customs.gov.my/portal/page/portal/MYGSET) this morning. The RMC invites the members of public to email their comments on these Guides to Tuan Mohd Hisham bin Mohd Nor at m_hisham.nor@customs.gov.my.

Draft Guides (i) may be viewed at http://www.gst.customs.gov.my/portal/page/portal/MYGSET/SubTopicDetailPage?_piref255_1040729_255_1040710_1040710.__ora_navig=nodeId=131 and draft Guide (ii) http://www.gst.customs.gov.my/portal/page/portal/MYGSET/SubTopicDetailPage?_piref255_1040729_255_1040710_1040710.__ora_navig=nodeId=134 :

i) Duty Free Shop

ii) Import.pdf

Members are requested to submit their comments to the Institute at kslim@ctim.org.my or secretariat@ctim.org.my so that a comprehensive feedback may be prepared and submitted to the Royal Malaysian Customs for consideration

List of taxable and non-taxable services for service tax purposes

The Royal Malaysian Customs (RMC) has issued a list of taxable and non-taxable services for service tax purposes. The list only serves as a guide and is not exhaustive because the types of services rendered may be different between different types of businesses.

For further details or enquiries, members may contact the RMC as follows:-

Tel: 03 - 8882 2100, Fax: 03 – 8889 5869

Email: cd@customs.gov.my

Website: www.customs.gov.my and click at ePertanyaan

Members may view the detailed list of taxable and non-taxable services at the RMC’s website at: http://www.customs.gov.my/index.php/bm/component/content/article/183-pengumuman/613-senarai-perkhidmatan-bercukai-dan-tidak-bercukai

Service Tax (Amendment) Regulations 2010

The Regulations will come into operation on 1 January 2011. The Regulations amend the second schedule of the Service Tax Regulations 1975 [P.U. (A) 52/1975] under the heading of Group G in column “Taxable Service”, by substituting item “b.” with the following item: “b. Provision of — (i) telecommunication services in the form of telephone, facsimile, telemail, pager, cellular phone, telex, bandwidth service or value added services; and (ii) paid television broadcasting services.”