Freight transportation is a supply of services for the carriage or movement of goods by sea and inland waterways, rail, road or air using various means of transportation such as ships, trains, lorries, trucks or aircraft.
Domestic freight transportation services (both the origin and the destination are in Malaysia) are standard-rated except when:
- the transportation is made by a supplier of exempt or zero-rated items and the transportation is incidental to the supply of such items, provided no separate charge is imposed for the transportation.
- the services are supplied by the same supplier who provided the international freight transportation services for the goods.
International freight transportation services (either the origin or the destination or both are outside Malaysia) are zero-rated. However, ancillary services such as loading and unloading are taxable either at the standard-rate of 6% or at the rate of zero, depending on the nature of the service provider’s operations and other factors.
Supply of freight transportation service within the designated areas (Langkawi, Labuan and Tioman) is zero-rated, but transportation between a place in the designated area and another place in Malaysia is standard-rated. On the other hand, supply of freight transportation service in or to a Free Commercial Zone or Free Industrial Zone or to Licensed Manufacturing Warehouses is standard-rated.
The services of forwarding agent are standard-rated, regardless of whether they related to domestic or international freight transportation.