KUALA LUMPUR – The Ministry of Investment, Trade and Industry (MITI) has clarified that fruit importers and trading partners operating in Malaysia retain the right to apply for Sales and Service Tax (SST) exemption on imported fruits directly to the Ministry of Finance (MoF).
The statement, delivered in a written response to the Dewan Negara (Senate), emphasizes that this allowance is consistent with the treatment accorded under existing agreements, specifically referencing the Malaysia-US Counter Trade Agreement (ART).
Maintaining Flexibility Amid Global FTAs
MITI’s clarification came in response to inquiries regarding whether trading partners under broader multilateral agreements, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) or the Regional Comprehensive Economic Partnership (RCEP), could seek similar SST relief as granted to US partners.
The Ministry asserted that while Malaysia honors its tariff reduction or elimination commitments under these various Free Trade Agreements (FTAs), these commitments do not impinge upon the nation’s right to implement and manage internal taxes.
“The government retains full policy space and flexibility to continue implementing internal taxes such as SST and excise duties, including granting exemptions under the existing taxation system,” MITI stated, stressing that this right is independent of the existence of any counter trade agreements.
The Exemption Process and Food Security
The eligibility for any SST exemption on imported fruits remains subject to assessment and approval by the MoF under the Sales Tax Act 2018.
However, MITI noted that for the purpose of ensuring national food security, the vast majority of fresh fruits are already generally granted tax exemption at present. This suggests that the current avenue for application primarily addresses highly specific or technical trade scenarios, rather than initiating a broad new exemption for staple fresh produce.
The government’s response confirms its commitment to promoting trade equity while firmly maintaining control over its domestic fiscal policy mechanisms.
