Updated Guideline on Item 55 Sales Tax Exemption on Machinery, Equipment and Spare Parts for Manufacturing (CD/9/2025)

FMM has been engaging the Ministry of Finance (MOF) since July 2025 to secure sales tax exemption for machinery and equipment, recognising that this capital equipment directly affects the operations and growth of manufacturers. We are pleased to inform that MOF has approved the exemption under Item 55 of Schedule A of the Sales Tax (Persons Exempted from Payment of Tax) Order.

On September 26, 2025, the Royal Malaysian Customs Department issued the Guideline on Sales Tax Exemption under Item 55 of the Sales Tax (Persons Exempted from Payment of Tax) Order. The Guideline sets out the conditions of approval, details the application process, and includes the list of machinery, equipment and spare parts eligible for exemption once approval is granted. The exemption applies to manufacturers in the Principal Customs Area endorsed by the Malaysian Investment Development Authority (MIDA) for the import or purchase of machinery, equipment and spare parts used directly in the manufacturing of finished goods.

Application Process

1. Manufacturers must first obtain a Confirmation Letter (Surat Pengesahan MIDA, SPM) from MIDA. Applications can be submitted online at https://www.mida.gov.my/forms-and-guidelines/online-applications/
2. With the MIDA reference number, manufacturers can then apply for the Sales Tax Exemption Certificate through the MySST portal. Approval will be issued by RMCD.

Key Conditions

• Machinery, equipment and spare parts must be new, unused and directly used in the approved manufacturer’s production process.
• Exempted machinery, equipment and spare parts must remain at the approved manufacturer’s premises at all times. They must also be installed and used in the production process locally and cannot be imported for resale or direct export.
• Sale, transfer, export or disposal of exempted goods is only permitted with prior written approval from the Director General of Customs.
• If disposed or transferred within ten years, sales tax becomes payable (except for specified scrap). Items that have reached an economic lifespan of ten years or more are exempted from repayment.
• Manufacturers must account for and report all exempted items to Customs.

Non-compliance may result in recovery of the exempted sales tax and penalties under the Sales Tax Act 2018. Members are encouraged to review the attached Customs Guide for full details, including application procedures for the MIDA confirmation letter and sales tax exemption certificate via the MySST system.

To help members understand both the expanded SST framework and the application procedures for sales tax exemption under Item 55 of Schedule A, FMM will organise a two-day seminar titled “Sales and Services Tax (SST) Expansion: 100 Days in Review – What Manufacturers and Businesses Should Know” on October 7 & 8, 2025 at M World Hotel Petaling Jaya. The seminar will provide detailed guidance on the application process for sales tax exemption, practical compliance tips, and insights on the broader SST expansion and transitional arrangements.

For registration, kindly submit the registration form to FMM Secretariat, Ms Farah Nabilah at farah_nabilah@fmm.org.my