| 1. |
In principle, LMW’s finished goods are required to be exported 100%. However, LMW company is allowed to sell its finished goods to the local market not exceeding 20% for a period of 12 months from the approval date of the license (within the current licensing period). For local market sales, import duty and sales tax should be calculated on the basis as if such goods had been imported in accordance with the requirements of section 65A (3) (b) of the Customs Act 1967 and Section 57 (b) of the Sales Tax Act 2018. |
| 2. | The assessment of import duty and sales tax on finished goods should refer to Customs Duities Order 2017 and for the purpose of price valuation of goods must follow Customs (Rules of Valuation) Regulations 1999. |
| 3. |
Sale of finished goods to the local market must be declared using Customs Form No. 9 (K9) with the following transaction type;
| Code | Transaction types | | E | LMW Local Sales | | LS | LMW Local Sales with Preferential Tariff | | LX | LMW Local Sales with Exemption |
|
| 4. | The sale of LMW’s finished goods to local market
is subject to import duty and sales tax in accordance with the Customs Duty
Order 2017. However, LMW companies can apply to pay import duty at the EQUIVALENT
rate as ATIGA in accordance with the Customs Duties (Goods of ASEAN Countries
Origin) (ASEAN Harmonized Tariff Nomenclature and ASEAN Trade in Goods
Agreement) Order 2017 (ATIGA) subject to the criteria given. |
| | 4.1 | LMW companies must comply with the Regional
Value Content requirement of at least 40% value of the raw material content
from local and / or ASEAN. Calculation method to determine the percentage of
Regional Value Content (RVC) as follows: |
| | | a. | Direct Method
Asean Material Cost + Direct Labour Cost + Direct Overhead Cost + Other Cost X 100%
RVC = ________________________________________________________________________________________________________
FOB Price
|
| | | b. | Indirect Method FOB Price - Value of non-Originating Materials, parts of goods X 100% RVC = ________________________________________________________________________________ FOB Price
|
| | 4.2 | This facility can also be considered if the
consumption of local raw materials (including from ASEAN countries) is less
than 40% and LMW company can prove that the non-originating raw material used
has undergone substantive transformation through the following methods.
However, only final products listed under ANNEX 3 “Products Specific Rules” are
eligible to pay import duty at the equivalent rate of ATIGA. The four methods
are as follows: |
| | | a. | Change in tariff classification in the first two
digit or Change in Chapter (CC) under the Harmonized System (HS). This means
that raw materials (other than ASEAN) need to derive from different Chapters to
enable the final product to enjoy the ATIGA tariff concession. |
| | | b. | Change in tariff classification at four digit or
Change in Tariff Heading (CTH) under Harmonized System (HS). This means that
raw materials (other than ASEAN) need to derive from different heading to
enable the final product to enjoy the ATIGA tariff concession. |
| | | c. | Change in tariff classification at six digit or Change in Tariff Sub-Heading (CTSH) under Harmonized System (HS). This means that raw materials (other than ASEAN) need to derive from different sub-heading to enable the final product to enjoy the ATIGA tariff concession. |
| | | d. | Process rule is the process that react to the raw materials (other than ASEAN) in the production of the final product. It applies to products such as textiles and chemicals. Generally, it does not involve the changes of tariff classification. |
| 5. | Application must be submitted to the State Director of Customs / Zone Operations Director. Document to be submitted are as follows: |
| | a. | Appendix I – Application to Pay Import Duty
Equivalent to ATIGA Rate; |
| | b. | Appendix IA – List of Approved Finished Goods
for Payment of Duty Equivalent to ATIGA Rate for LMW; and |
| | c. | Appendix J - Cost Analysis of the Finished Product Equivalent to ATIGA. |
| 6. | Applications and considerations for approval
will be based on the information given. Any changes on the information will
revoke the approval. It is the responsibility of the LMW company to submit a
new application with the latest information for further consideration. |
| 7. | For LMW Companies that are not eligible to enjoy
duty rates equivalent to ATIGA, import duty must be paid in full in accordance
with the Customs Duty Order 2017. |
| 8. | The approval to sell the finished goods to local
market using import duty EQUIVALENT to ATIGA rate is LIMITED up to the
percentage of local sales quota as stated in the LMW license conditions. This
facility is not applicable for sales that exceeding local sales quota. The import
duties must be paid at the current rate based on the Customs Duty Order 2017. |
