How Will Malaysia’s Customs Duties Order 2025 Affect Your Import Tariffs, SST and Pricing Strategy?

Malaysia’s Customs Duties Order 2025, taking effect on 1 November 2025, introduces significant tariff code updates, reclassification changes, and duty rate adjustments that will directly affect how businesses price imported goods, calculate SST, manage landed costs, and structure supply chain contracts.

For Malaysian SMEs, the impact goes far beyond customs declaration. The new duty structure will influence:

• import duty obligations
• SST treatment
• landed cost calculation
• supplier pricing and negotiations
• costing accuracy
• tax planning
• overall profitability

This guide explains what’s changing, how it affects your business, and what SMEs should do before 2026 to avoid inaccurate filings, cost overruns, or supply chain disruptions.

1. What Is the Customs Duties Order 2025?

The Customs Duties Order defines:

• tariff classifications
• duty rates
• exemptions and conditions
• import/export reliefs
• compliance requirements tied to HS Codes

Every few years, Malaysia aligns its Customs Duties Order with the Harmonised System (HS) updates from the World Customs Organization (WCO).

The 2025 update introduces:

• New HS code structures
• Tariff reclassification for selected goods
• Duty rate increases or reductions
• Removal of certain exemptions
• New product definitions and subcategories

For importers, these changes will directly affect your duty payable, SST treatment, and landed cost calculations.

2. Why the 2025 Customs Duty Changes Matter for Malaysian SMEs

2.1 Your HS Code may no longer be valid

Hundreds of codes undergo renaming, restructuring, or merging. If you are still using your 2023/2024 code, your declarations may become non-compliant.

2.2 Duty rates may increase or decrease

Even a small percentage change affects:

• landed cost
• pricing
• profit margins
• customer quotations

For SMEs with tight margins, this is critical.

2.3 SST classification depends on accurate tariff codes

Mistakes in tariff code selection can cause:

• SST underpayment or overpayment
• audits from RMCD
• penalties for incorrect declarations
• delays in goods clearance

2.4 Your supplier contracts might need revision

Import duty shifts can push landed costs up. If contracts were priced based on older duty rates, SMEs may face:

• shrinking margins
• disputes over price adjustments
• unplanned cost absorption
• inaccurate long-term quotations

2.5 2026 will have stricter compliance

Malaysia is aligning with broader ASEAN customs modernisation. Expect tighter scrutiny, digital checks, and stricter tariff validations in 2026.

3. Impact on Import Tariffs and Landed Cost Calculations

The Customs Duties Order 2025 affects every stage of your landed cost model:

3.1 Direct Import Duty Calculation

Your payable duty changes immediately when the tariff code changes.

Example: If your product moves from a 0% duty code to a 5% duty code, your entire pricing model must be recalculated.

3.2 New Product Classifications

Some categories may experience:

• New duty brackets
• Different valuations
• Modified excise treatment

Industries often affected include:

• machinery
• electronics
• agro-based products
• processed foods
• chemicals
• plastics

3.3 Preferential Tariffs (FTA) May Shift

If you rely on:

• ATIGA
• ACFTA
• CPTPP
• RCEP

then tariff reclassification may change your eligibility for preferential duty rates.

4. How the New Customs Duties Order Affects SST Treatment

4.1 Importer SST (Service Tax or Sales Tax) is tied to HS classification

An inaccurate code can cause:

• wrong SST rate applied
• disputes with RMCD
• delays in import clearance
• future back-dated SST assessments

4.2 Sales Tax Exemption (STeP) may be affected

If your HS code changes, your prior exemption approval may need to be renewed.

4.3 Threshold-based SST treatments may shift

Reclassification may change:

• whether your product is SST-taxable
• the applicable rate (5% / 10%)
• your supply chain tax position

4.4 Manufacturers and traders must re-evaluate Bill of Materials

Raw materials that shift tariff code may:

• affect final product SST calculations
• alter SST credits
• impact costing for production

5. Pricing Strategy: Why SMEs Must Recalculate Before 2026

Your pricing model from 2024/2025 may no longer be accurate.

5.1 Expect margin fluctuations

Duty increases push landed costs up. If you do not adjust pricing, profit margins shrink instantly.

5.2 Customer and supplier contracts may require renegotiation

Any long-term contract signed before November 2025 should be reviewed for:

• duty rate changes
• price adjustment clauses
• new SST implications

5.3 Quotation templates must be updated

Many SMEs maintain fixed quotation structures. Using outdated landed cost formulas may turn profitable jobs into losses.

5.4 E-commerce sellers must update import declarations

If you import in bulk and sell online, inaccurate HS codes may cause:

• inconsistent SST treatment
• RMCD audits
• incorrect pricing on online stores

6. Who Is Most Affected by the Customs Duties Order 2025?

Industries with the largest reclassification impact:

• Electronics & components
• Plastics, rubber and polymers
• Food & beverage importers
• Machinery & tools
• Automotive parts
• Chemicals and industrial supplies
• Household goods
• Textile and garment importers
• Beauty, personal care & health products

If your business imports goods from ASEAN, China, Japan, EU, or the Middle East, the effect may be multiplied due to preferential tariff changes.

7. What Malaysian SMEs Should Do Before 2026

7.1 Review all HS codes with a tax or customs specialist

Do NOT rely on old codes. Even slight description changes can shift your tariff category.

7.2 Recalculate landed cost and SST impact

You should update:

• supplier quotations
• pricing templates
• costing sheets
• tax calculations
• profit margin analysis

7.3 Test your pricing strategy under the new duty rates

This is crucial for:

• wholesale distributors
• manufacturers
• e-commerce sellers
• multi-market importers

7.4 Update your supply contracts

Particularly clauses covering:

• duties
• SST
• cost adjustments
• shipping terms

7.5 Ensure import documentation is aligned to the new codes

RMCD will apply stricter validation in 2026 as the new structure becomes standardised.

7.6 Update your accounting and tax systems

Ensure your system reflects:

• new tariff codes
• new duty percentages
• updated SST mapping

Manual mistakes here are expensive and time-consuming to fix.

8. Malaysia SMEs Should Prepare for Stricter Compliance in 2026

The 2025 Customs Duties Order is not an isolated update — it’s the beginning of broader regulatory tightening.

Expect in 2026:

• More digital verification of tariff codes
• Increased RMCD audits on SST and import classification
• More automated cross-checking in uCustoms
• Greater scrutiny of FTA (RCEP / CPTPP) documents
• Stricter penalties for misclassification

SMEs that upgrade their systems and compliance workflows now will be better positioned, with fewer disruptions.

Conclusion

Malaysia’s Customs Duties Order 2025 will reshape the way SMEs calculate import tariffs, determine SST, and manage pricing strategies.
The impact reaches deep into:

• costing models
• supply chain planning
• compliance workflows
• tax reporting
• profit forecasting
• 2026 budgeting and expansion decisions

SMEs that review their HS codes, reassess landed costs, and strengthen their tax and SST processes now will enter 2026 with stronger financial control, fewer compliance risks, and better margins.