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Sales Tax Policy No. 2/2022: Facilitation of Drop-shipment Activity


There's no doubt that the drop-shipping business model is a type of business that is both easy to start and very good for business.



Drop-shipping companies are already being started by people of all ages, in all parts of the world, with various histories and levels of expertise.

On its MySST website, the Royal Malaysian Customs Department (RMCD) has published the Sales Tax Policy (in Bahasa Malaysia) dated August 24, 2022.




Under the Sales Tax Policy:

  • A registered manufacturer who exports taxable finished goods produced or manufactured is exempt from payment of sales tax under Item 56, Schedule A, Sales Tax Order (Persons Exempt From Payment of Tax) 2018.

  • The registered manufacturer can also export its finished goods sold to traders in Malaysia, and the finished goods are exempted from payment of sales tax under the said details.

  • This situation occurs when the trader receives purchase orders from customers outside Malaysia.

  • The trader then purchases from the registered manufacturer and instructs the registered manufacturer to export the finished goods on his behalf directly.


  • In this case, the registered manufacturer must issue a sales invoice to merchants without charging sales tax. Invoice details must meet Rule 7, Sales Tax Regulations 2018, stating particulars of "bill to" and "ship to".


  • Finished goods exported by a Registered Manufacturer on behalf of an eligible trader being exempted from sales tax involves only one level of traders, i.e. traders who buy finished goods from registered manufacturers only and not involving other traders who buy from that trader.


  • The export declaration system will show that the finished goods are exported by stating:

  • The name of the registered manufacturer as the Consignee (exporter) is inside the consignee column.

  • The customer's name outside Malaysia as the Consignee (importer) in the consignment section in Customs Form K2.


  • Besides, clause care of (on behalf of) the trader (full name and address) should be stated on the left side of Form K2 near the column for the Forwarding Agent (Customs Agent).


  • The Bill of Lading should be stated as per the Form K2, i.e.

  • The consignor is in the name of the registered manufacturer; and

  • The consignee is in the name of the customer outside of Malaysia.


  • In Form SST-02, Registered manufacturers must declare the sales value of finished goods exported on behalf of the trader in column 18 (a) – Export / Special Area / Designated Area.

181.1 Sales Tax Policy No. 2_2022 - Facilitation of Drop-shipment Activity
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This Sales Tax Policy can be found here:-




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