Thursday, October 22, 2009

FMM proposes Double Tax Deduction on Freight Charges

The Federation of Malaysian Manufacturers have made certain recommendations to the Government for Budget 2010. Below is an extract of the part of FMM's recommendations that relates to the logistics industry:

Over 80% of Malaysian exports are currently exporting Free On Board (FOB) due to highfreight rates and various ancillary charges imposed by shipping lines. However foreign buyers prefer to be quoted Cost, Insurance and Freight (CIF) as an all inclusive price.

Exporting on FOB basis reduces the competitiveness of Malaysian manufactured products and restricts access into the global markets. Currently, a double tax deduction on freight charges is given to the following sectors:

a. All manufacturers who ship their goods from Sabah and Sarawak to Peninsular Malaysia provided they use the ports in Peninsular Malaysia; and

b. Manufacturers who export rattan and wood-based products (excluding sawn timber and veneer) qualify for double deduction on freight charges.

Ship freight charges for all other sectors are allowed single tax deduction.

FMM’s Recommendation:
To increase market and trading potentials and encourage exports on CIF basis, double tax deduction on freight charges should be given to all manufacturers who ship their goods from Malaysian ports to international markets.

Read the rest of FMM's Budget 2010 recommendations here.

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