When it comes to shipping internationally, familiarising yourself with your destination country’s customs regulations is one way to ensure a smooth shipping experience. One of these regulations to look out for is the country’s import duties and taxes, along with a value threshold known as the de minimis rate.
If you’re planning to ship to online shoppers in Malaysia, knowing Malaysia’s de minimis rate and import duties and taxes can help your goods clear customs easily. Being a tiger cub economy, Malaysia is one of the more attractive eCommerce markets to enter within Southeast Asia. The country enjoys a high internet penetration rate (83%) and an active eCommerce user base, where 82% of internet goers have bought something online.1 Not only that, its relatively high de minimis rate is an encouraging sign for international merchants to enter the market.
But first, it helps to know what de minimis rate means.
What is the De Minimis Rate in Malaysia?
De minimis rate is the price threshold below which fewer or no taxes are charged on shipments entering the country. In Malaysia, the de minimis rate is MYR 500 or roughly USD 115 as of the time of this writing. This rate takes into account the value of the shipped goods and the shipping fees.2
The term ‘de minimis’ comes from a longer Latin phrase that translates to ‘the law does not concern itself with trifles’.3 When it comes to international shipping into Malaysia, the de minimis rate only applies to B2C cross-border shipments delivered via air freight. This means that parcels entering Malaysia via other modes of transport, such as cross-border trucking, are not exempt from import duties and taxes.
International merchants will find that Malaysia’s high de minimis rate is a boon for them. This is because merchants who sold items that are less than MYR 500 wouldn’t need to pay extra duties and taxes when their order gets delivered to their Malaysian consumers.
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How Much are the Taxes if my Goods Surpass the De Minimis Rate in Malaysia?
If the CIF value, which means your goods' value, shipping fees, and insurance fees, exceeds MYR 500, then you’ll have to pay import duties in the range of 0% to 25%, and sales & services tax (SST) in the range of 5% to 10%
Import duty is a type of tax collected on imports into the country, which can help the local government to raise income and provide a market advantage for locally produced goods from global competition.4 Additionally, Malaysia also has a sales and service tax (SST) that is levied on the sales of imported goods.5
The rates for your goods depend on your product category identified by the Harmonised Systems Code (HS Code), which is a classification system developed by the World Customs Organization to classify over 5,000 product categories. You can check out the rate on your specific goods on Malaysia’s Customs Portal.6
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How Can I Ensure Smooth Customs Clearance into Malaysia?
Now that you know how much the de minimis rate, import duties and taxes are in Malaysia, you’ll also need to ensure that your shipments are labelled accurately and provide the documents needed to clear Malaysian customs smoothly. If you’re not familiar with the B2C customs clearance process, we’ve covered that topic in a previous article and in our customs clearance resources.
Engaging with a reliable shipping partner can help to ensure that your customs documentation is accurate and complete. However, you’ll also need to ensure that the shipping documents are accurate, such as ensuring that the end-consumer’s address is correct.
If your parcels are above the de minimis threshold, how you settle your import duties and taxes will be determined by these two incoterms: DDU or DDP. We’ve covered what DDU and DDP means in our article on incoterms, and our recommendation is to opt for DDP and seek out a shipping partner who can arrange to pay for your import duties and taxes prior to the shipment arriving in Malaysia. By following these steps, you’re able to optimise your steps for efficient customs clearance into Malaysia.
By knowing about Malaysia’s de minimis value and its import duties and taxes, you’re one step closer to ensuring that your international shipments can be shipped to your Malaysian customers easily. Having a reliable international shipping partner who covers customs clearance in their international shipping solutions can also help you enter a new market like Malaysia with a bang. Since fulfilment is the moment of truth for many eCommerce shoppers, making a lasting impression by getting your eCommerce deliveries to arrive on your customers’ doorstep on time is one way of leaving your mark.
Looking to ship internationally throughout Southeast Asia? Contact us to find out how.
You may also want to check out our other articles on customs clearance in Southeast Asia: