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Industry Guide:

Freight Transportation

 
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FREQUENTLY ASKED QUESTIONS (FAQS) 

1. Is there special treatment for goods transported by ferry?

The transport of goods including unaccompanied vehicles transported by ferries or barges is standard rated. However for vehicle accompanied by a fare paying passenger who drives the vehicle, the transport service is treated as passenger transportation.

Example:

Encik Abu owns a car showroom in Bukit Jambul, Penang. He brings a batch of the latest Proton models by ferry from Butterworth.

- The transport of the new Proton cars is standard rated

2. What about goods sent by post?

Domestic postal services are subject to GST at a standard rate. Documents and goods sent from overseas by courier service to any place in Malaysia and vice versa is zero rated. Please refer to GST Guide on Postal and Courier Services for more details.

3. Is there special treatment for freight transportation provided in and to the free ports of Langkawi, Labuan and Tioman?

No GST will be charge on any taxable supply provided from a place in the free port to another place in the same free port. However, supplies of freight transportation to destinations in the free ports from any place in Malaysia or vice versa are standard rated. Please refer to GST Guide on Designated Area for more details. 

Example:

FP Co. operates lorry transport on Langkawi Island. The company also provides transportation of goods by ferry from Kuah jetty to Teluk Ewa port. It also charters a private plane to occasionally send goods to Tioman.

- FP Co. will not charge GST on supply of freight transportation by lorry and ferry.

- The transport of goods by plane to Tioman is standard rated.

4. Is there special treatment for freight transportation provided in and to a Free Commercial Zone (FCZ)?

No, any supply of service in or to a Free Commercial Zone (FCZ) including freight transportation is subject to GST at a standard rate.

5. What about freight transportation provided in and to businesses operating in a Free Industrial Zone (FIZ)?

Freight transportation provided in and to businesses in a FIZ is standard rated. Domestic freight transportation services are also standard rated if supplied to Licensed Manufacturing Warehouses. 

6. What is the GST treatment for the services of arranging freight transportation?

The services of arranging the transport of goods is standard rated whether or not the freight transportation is domestic or international. 

Example

An exporter engages a forwarding agent to arrange for his goods to be exported. The forwarding agent arranges with a shipping agent for space (freight) on a ship, loading of goods and customs clearance.

- The arranging for services by the forwarding agent for the exporter is standard rated. 

7. The GST treatment above relates to output of a registered person. What about GST incurred on inputs?

Generally, GST on standard rated supplies of goods or services forming business inputs to a registered person making taxable (standard rated and zero rated) supplies, including disregarded supplies are allowed to offset against the output tax payable. Ancillary transport and related transport services would be inputs for a supplier of freight transportation and the GST incurred would be allowable for input tax credits. Valid GST invoices including receipts which are accepted as simplified GST invoices must be available before input tax credits can be claimed. Please refer to GST General Guide and GST Guide on Input Tax Credit for further guidance on the eligibility of input tax credits.

8. What is the GST treatment if I export my goods from Serendah to Bangkok by rail?

The movement of goods from Serendah to Padang Besar is domestic freight transportation and is subject to GST at standard rate, while from Padang Besar to Bangkok is international freight transportation at zero rate. However, in this example the whole freight transportation is eligible for zero rate treatment if the domestic leg as well as the international leg of the freight transportation is provided by the same supplier such as KTM Bhd. 



 
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L & Co Plt.

Johor
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Tel +607-859 0410
Fax +607-863 1003
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Tel +604-377 7075
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