Application for MIDA Confirmation Letter [Surat Pengesahan MIDA (SPM)] for Import Duty and/or Sales Tax Exemption in Malaysia

Roger Pay
9 hours ago
6 min read

Application for MIDA Confirmation Letter [Surat Pengesahan MIDA (SPM)] for Import Duty and/or Sales Tax Exemption in Malaysia

The Malaysian Investment Development Authority (MIDA) plays a crucial role in facilitating import duty and/or sales tax exemptions for eligible companies in Malaysia. These exemptions aim to reduce the cost of doing business and enhance the competitiveness of local industries.

Here's a comprehensive guide to applying for a MIDA Confirmation Letter (Surat Pengesahan MIDA (SPM)) for import duty and/or sales tax exemption:

I. Overview of MIDA Confirmation Letter (SPM)

The MIDA Confirmation Letter (SPM) is a crucial document that allows eligible companies to claim import duty and/or sales tax exemptions from the Royal Malaysian Customs Department (RMCD). This letter confirms that the company and the goods being imported/purchased meet the criteria for exemption under relevant laws such as the Customs Act 1967 and Sales Tax Act 2018.

II. Eligibility for Exemption

Exemptions are generally available for:

Manufacturers in Principal Customs Area (PCA): For machinery, equipment, spare parts, prime movers, container trailers, specialized tools, components, materials, or specialized consumables used directly in the manufacturing process.
Companies Engaged in Hotel Business: For machinery, equipment, spare parts, and specialized tools.
Haulage Operators: For prime movers and container trailers.
Aerospace Maintenance, Repair & Overhaul (MRO) Companies: For machinery, equipment, spare parts, components, materials, and specialized consumables.
Selected Services Sectors: For machinery and equipment used directly in activities such as:
- Research & Development (R&D)
- Private Higher Education Institutions
- Private Higher Training Institutions (science, technical, or vocational)
- Tourism Projects (without accommodation)

Note: For raw materials and components, companies engaged in manufacturing activities can be considered for import duty exemption on items used directly in the production of finished products. Certain selected industries that manufacture finished products not subjected to sales tax can also apply for sales tax exemption on imported or locally sourced raw materials and components (e.g., aerospace/aircraft, machinery & equipment, petroleum products as raw materials, motorcycle assembly).

Important Considerations for Eligibility:

Manufacturing Licence: Companies generally require a Manufacturing Licence under the Industrial Coordination Act 1975, or a Confirmation Letter for Exemption from Manufacturing Licence from MIDA.
Tax Incentive Approval: If applicable, tax incentive approval under the Promotion of Investment Act 1986 (PIA) or Income Tax Act 1967.
Minimum Value: Typically, only applications with a total duty and/or tax exemption value of RM5,000 and above (per submission) will be considered.
Prior Submission: The application must be submitted before the importation or purchase of the goods. Companies are advised to plan well to allow for processing time.

III. Application Process

The application for a MIDA Confirmation Letter (SPM) is submitted online via the InvestMalaysia portal (https://investmalaysia.mida.gov.my). All confirmation letters are processed and signed digitally.

General Steps:

Register an account on the InvestMalaysia portal if you are a first-time user.
Log in to the InvestMalaysia portal.
Navigate to the relevant application section. For import duty and/or sales tax exemption, look under "Application for Import Duty and/or Sales Tax Exemption" (usually under "Group C").
Select the specific type of exemption you are applying for (e.g., "Manufacturers in Principal Custom Area (PCA)", "Companies Engaged in Hotel Business", "Haulage Operators", "Aerospace Maintenance, Repair & Overhaul (MRO) Companies", or specific service sectors like R&D, etc.).
Complete the online application form with accurate and comprehensive information.
Upload all required supporting documents (scanned copies).

IV. Required Documents (General)

While specific requirements may vary slightly depending on the type of exemption, common documents typically include:

Manufacturing Licence issued under the Industrial Coordination Act 1975, or a Confirmation Letter for a Company Exempted from Manufacturing Licence from MIDA.
Business Premise License from the Local Authority (applicable for companies exempted from Manufacturing Licence).
Latest printout of SSM Company Profile (e-info) from Companies Commission of Malaysia (SSM).
Manufacturing Process Flow Chart (for manufacturers).
Layout plan for machinery and equipment in the approved premises, indicating their location.
Tax incentive approval under the Promotion of Investment Act 1986 (PIA) or Income Tax Act 1967 (if applicable).
Registration certificate or letter of acknowledgement from the Department of Occupational Safety and Health (DOSH) if the application for registration certificate is pending approval.
Specific lists of machinery, equipment, spare parts, prime movers, container trailers, specialized tools, components, materials, or specialized consumables for which the exemption is sought.

Note: For import duty exemption on raw materials/components for the iron and steel industry (HS Code 7201-7316), separate applications need to be made for domestic or export/Free Zone (FZ)/Licensed Manufacturing Warehouse (LMW) markets.

V. Post-Approval Process

Upon receiving the MIDA Confirmation Letter (SPM), companies must then submit this letter and the list of approved goods to the Royal Malaysian Customs Department (RMCD) to obtain permission for the actual import duty and/or sales tax exemption.

For import duty exemption, the submission is typically done manually to the State Customs Control Station (Industrial Section).
For sales tax exemption, it usually has to be submitted online via MySST (https://mysst.customs.gov.my/).

VI. Important Reminders

Completeness and Accuracy: Ensure all information provided in your application is complete, accurate, and consistent to avoid delays. Incomplete applications will be returned.
Proactive Planning: Submit your application well in advance of your planned importation or purchase, considering the processing time required by both MIDA and Customs.
Guidelines: Refer to the detailed guidelines available on the MIDA InvestMalaysia portal for your specific exemption type.
Contact MIDA: For any inquiries or clarifications, you can contact MIDA directly. Their contact details are available on their official website (www.mida.gov.my).

By following these steps and ensuring all requirements are met, companies can streamline their application for MIDA Confirmation Letters and effectively utilize the import duty and/or sales tax exemptions provided by the Malaysian government.

How Bestar can Help

Application for MIDA Confirmation Letter [Surat Pengesahan MIDA (SPM)] for Import Duty and/or Sales Tax Exemption in Malaysia

While applying for a MIDA Confirmation Letter (SPM) for import duty and/or sales tax exemption can be done directly by companies through the InvestMalaysia portal, engaging Bestar can offer significant advantages, especially for businesses unfamiliar with the intricacies of Malaysian regulations or those with complex applications.

Here's how Bestar can help:

Expert Knowledge and Eligibility Assessment:
- In-depth Understanding: Bestar possesses specialized knowledge of MIDA's guidelines, the Customs Act 1967, and Sales Tax Act 2018. We stay updated on the latest changes and interpretations.
- Accurate Eligibility Check: We can meticulously assess your company's specific activities, proposed imports/purchases, and financial structure against MIDA's detailed eligibility criteria. This includes understanding nuances like what constitutes "direct use in manufacturing," minimum value thresholds, and specific industry requirements. This helps prevent wasted effort on ineligible applications.
- Identifying Applicable Exemptions: We can advise on the most suitable type of exemption for your business, ensuring you apply under the correct category (e.g., manufacturer, hotel, MRO, specific service sector).
Streamlining the Application Process:
- Comprehensive Document Checklist: Bestar can provide a precise and comprehensive checklist of all required supporting documents, ensuring nothing is missed. This goes beyond the generic lists and considers the specifics of your case.
- Document Preparation and Review: We can assist in preparing, reviewing, and organizing all necessary documents to ensure accuracy, completeness, and adherence to MIDA's specific formatting and content requirements. This includes scrutinizing things like manufacturing process flow charts, plant layouts, and financial statements.
- Navigating the InvestMalaysia Portal: While the portal is user-friendly, Bestar is familiar with its functionalities, potential quirks, and best practices for online submission. We can guide you through each step, minimizing errors.
- Anticipating and Addressing Issues: Our experience allows us to anticipate common pitfalls, missing information, or potential queries from MIDA, enabling proactive measures to prevent delays or rejection.
Crafting a Strong and Compliant Application:
- Clear and Concise Information: Bestar can help present your company's information and justification for exemption in a clear, concise, and professional manner, aligning with MIDA's expectations.
- Justification and Supporting Statements: For more complex cases, we can assist in articulating compelling justifications and providing strong supporting statements that strengthen your application.
- Ensuring Compliance: We ensure that all aspects of your application comply with the latest MIDA guidelines and regulations, reducing the risk of non-compliance issues later on.
Liaison and Communication with MIDA:
- Point of Contact: Bestar can act as your primary liaison with MIDA, handling inquiries, providing clarifications, and responding to requests for additional information on your behalf. This saves your internal team time and effort.
- Proactive Follow-up: We can proactively follow up on the status of your application, ensuring it progresses smoothly and addressing any roadblocks efficiently.
- Understanding MIDA's Processes: Our familiarity with MIDA's internal processes and timelines can lead to a smoother and potentially faster outcome.
Maximizing Benefits and Long-Term Compliance:
- Optimizing Exemptions: We can help identify all potential eligible items for exemption, ensuring you fully leverage the available benefits.
- Post-Approval Guidance: After MIDA approval, we can guide you on the subsequent steps with the Royal Malaysian Customs Department (RMCD), including manual submissions and online processes (MySST), to effectively claim the exemptions.
- Compliance Post-Exemption: We can advise on the ongoing record-keeping and compliance requirements related to the exemptions to ensure you remain in good standing with the authorities.

When is professional help most beneficial?

First-time applicants: Companies new to the Malaysian regulatory landscape.
Complex projects: Projects involving a large number of diverse items, intricate manufacturing processes, or novel technologies.
Time constraints: When your internal team has limited time or resources to dedicate to the application process.
Ambiguous eligibility: If your company's eligibility is not straightforward or falls into a grey area.
Desire for efficiency and certainty: To minimize errors, avoid delays, and increase the likelihood of a successful application on the first attempt.

While engaging Bestar comes with a cost, the potential savings from successful exemption claims, avoidance of penalties due to non-compliance, and the efficient use of internal resources often outweigh the consulting fees.

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