Budget 2027 changes no import duty rate and no sales tax rate on commercial imports. The measure that moves money for a Malaysian importer or distributor is a proposed sales tax refund facility for local traders and distributors supplying manufacturers, effective 1 January 2027. Malaysian shipping companies are proposed to keep their full income tax exemption to YA 2036. Everything else on a commercial declaration stays as it is.
Key takeaways
- No rate changes at the border. “No new taxes or substantial changes to the indirect tax regime have been proposed in the 2027 Budget” (KPMG Malaysia).
- One real change for traders. A sales tax refund is proposed for local traders or distributors that paid sales tax on machinery, parts, equipment or approved manufacturing inputs supplied onward to manufacturers (MOF, Appendix 33).
- Shipping gets ten more years. Full income tax exemption for Malaysian shipping companies ran only to year of assessment 2026; it is extended to YA 2036 on tighter conditions.
- None of it is law yet. The refund's conditions and documentary requirements are unpublished; KPMG tells businesses to watch the Finance Bill and subsidiary legislation.
Does Budget 2027 change import duty or SST on your imports?
No. Budget 2027, tabled on 9 October 2026, leaves import duty rates and sales tax on imported goods untouched. There is no new indirect tax, no rate revision and no change to how an import declaration is assessed. Duty and the sales tax you pay on imports into Port Klang in January 2027 will be calculated exactly as today.
“No new taxes or substantial changes to the indirect tax regime have been proposed in the 2027 Budget.” — Ng Sue Lynn, Partner and Head of Indirect Tax, KPMG in Malaysia
That stability sits on a growing base: the Ministry of Finance forecasts imports of goods and services at RM1.9 trillion in 2027 against an estimated RM1.8 trillion in 2026, and exports at RM2.2 trillion against RM2.1 trillion (EY, Take 5: Malaysia Budget 2027) — about 5.6% more import value under an unchanged regime. Our import duty and SST worked examples stay current.
What is the new sales tax refund facility for traders and distributors?
The sales tax refund facility is a proposed refund of sales tax already paid by a local trader or distributor on goods it supplies onward to a manufacturer. It covers machinery, spare parts and equipment under Item 55, Schedule A, and approved inputs for making pharmaceutical products, animal feed, fertilisers and pesticides under Schedule B, of the Sales Tax (Persons Exempted from Payment of Tax) Order 2018.
The gap it closes is specific. Today a manufacturer gets that exemption only on goods it imports directly or buys direct from a local registered manufacturer. The Ministry of Finance states plainly that “no sales tax exemption is given to manufacturers for the procurement of machinery, spare parts, equipment and inputs from local traders or distributors”. Buy the identical machine through a Malaysian distributor and the tax sticks. EY calls it “not a general input tax credit of the kind available under a Goods and Services Tax (GST) regime” but targeted recovery within the Sales Tax framework. This is not GST returning; it is one leak being patched.
| Measure | Position today | From 1 Jan 2027 | Status |
|---|---|---|---|
| Import duty & SST on imports | Per tariff and SST rates | Unchanged | No measure |
| Sales tax on Item 55 / Schedule B goods bought via a distributor | No exemption — tax embedded in cost | Refundable to the trader or distributor | Proposed |
| Malaysian shipping company income tax | Full exemption to YA 2026 | Full exemption to YA 2036, tighter conditions | Proposed |
| Langkawi & Labuan visitor allowance | RM1,000 | RM10,000, 48-hour stay | Proposed |
Why does a refund cost more than an exemption?
A sales tax refund costs more than an exemption because it is money you pay out first and chase later. An exemption is claimed at the point of supply and never leaves the business. A refund means the tax is paid, documented, claimed and waited on — so the measure that removes a cost also creates a working-capital gap and a claim to file.
The rules that would govern it are not out. KPMG's note says businesses “should look out for the eligibility conditions, documentary requirements, refund process and expected processing timeframe once the detailed rules are issued”. Until they land, the only safe preparation is documentary. DNE Forwarding clears and hauls over 1,000 containers a month through Port Klang at a 99%-plus documentation compliance rate, and on our declaration desk the relief claims that survive are the ones evidenced consignment by consignment at the time: keep the sales tax paid on Item 55 and Schedule B supplies traceable, invoice by invoice. Our clearance document checklist applies the same discipline at the border.
What does Budget 2027 do for exporters?
There is no new indirect tax, so export duty and the export declaration are untouched. EY's Take 5 records funding through the Malaysia External Trade Development Corporation (MATRADE) and Bank Pembangunan Malaysia Berhad to “help local businesses build export capabilities and expand into overseas markets”. An exporter applies to those two agencies, not to Customs.
What did Budget 2027 change for shipping and freight?
Budget 2027 changes two things for shipping, neither of which changes what you pay a carrier. The full income tax exemption for Malaysian shipping companies, due to lapse after year of assessment 2026, is extended to YA 2036, and stamp duty on ship financing is capped. Freight, haulage and terminal charges are not addressed at all.
The exemption now carries conditions set out in the Ministry of Finance's Budget 2027 tax measures (Appendix 24): strategic management and effective control in Malaysia, annual Malaysian operating expenditure of at least RM250,000 per Malaysian ship, and at least four Malaysian citizens at an average monthly salary of RM15,000 per ship. Stamp duty on a loan to buy or build a Malaysian ship is capped at RM2,000 up to RM100 million and RM5,000 above it. For shippers rather than shipowners, EY points instead to the Johor-Singapore Special Economic Zone and the northern border economic zones.
What changed on import duty for the duty-free islands?
Import duty exemption on Langkawi-origin goods entering the Principal Customs Area, under Item 76 of the Customs Duty (Exemption) Order 2017, is being revised and expanded from 1 January 2027 (Ministry of Finance, Budget 2027 tax measures, Appendix 31). That is the one traders should watch. The visitor allowance for Langkawi and Labuan rises from RM1,000 to RM10,000 on new goods other than tobacco, alcohol, vapes and tyres, on a 48-hour minimum stay (Appendix 32).
When do these measures actually become law?
Budget 2027's measures are not law yet. A Budget announcement is a statement of intent. Each measure needs the Finance Bill and, for indirect tax, amended subsidiary legislation — the Orders that carry the exemptions and refunds — before anyone can rely on it. The 1 January 2027 dates are proposed effective dates, not enacted ones.
- Tabled — 9 October 2026, by the Prime Minister and Finance Minister.
- Finance Bill — debated and passed, fixing the statutory changes.
- Subsidiary legislation — the amended Sales Tax and Customs Duty Orders.
- Implementation guidelines — conditions, documents, process, timeframe.
- Claimable — only now.
KPMG's closing instruction is to “continue to monitor the Finance Bill, subsidiary legislation and implementation guidelines as they are released”. For an importer, the practical test is: has the Order been amended, and has Customs published how to claim it? Until then there is nothing to revisit on duty or tax assumptions, and e-invoicing remains the heavier compliance lift this quarter.
Frequently asked questions
Did Budget 2027 raise import duty or SST in Malaysia?
No. Budget 2027 proposes no new taxes and no substantial change to Malaysia's indirect tax regime, according to KPMG's indirect tax commentary. Import duty rates, sales tax on imported goods and the way an import declaration is assessed are all unchanged. The Budget's indirect tax measures are targeted exemptions and refunds, not rate revisions.
Who can claim the new sales tax refund?
The local trader or distributor claims it, not the manufacturer. The Ministry of Finance proposes the refund for local traders or distributors that have paid sales tax on goods supplied to manufacturers — machinery, spare parts and equipment under Item 55, Schedule A, and approved inputs for pharmaceuticals, animal feed, fertilisers and pesticides under Schedule B. The conditions and refund process are unpublished.
Is the sales tax refund facility the return of GST?
No. EY describes it as “not a general input tax credit of the kind available under a Goods and Services Tax (GST) regime” but a targeted recovery inside the existing Sales Tax framework. It applies only to specified machinery, parts, equipment and manufacturing inputs supplied to manufacturers, not to business purchases generally.
Can I rely on the 1 January 2027 effective dates?
Not yet. Budget measures are proposals until the Finance Bill passes and the relevant subsidiary legislation is amended. KPMG advises businesses to monitor the Finance Bill, subsidiary legislation and implementation guidelines as they are released. Treat 1 January 2027 as the intended start date and prepare documentation around it, but do not book the benefit before the Order is gazetted.
Sources
- Ministry of Finance Malaysia — Budget 2027 Tax Measures
- KPMG in Malaysia — 2027 Budget: Indirect Tax Perspective
- EY — Take 5: Malaysia Budget 2027
- KPMG TaxNewsFlash — Malaysia: 2027 budget measures
This article explains publicly announced Budget 2027 measures and is not tax advice. DNE Forwarding is a JKDM-licensed freight forwarder, customs broker and container haulier; for a specific transaction, speak to a licensed tax agent.