The Royal Malaysian Customs Department (Abbr.; RMCD; – JKDM; Jawi: ); is a government department body under the Ministry of Finance. RMCD functions as the country's main indirect tax collector, facilitating trade and enforcing laws.
RMCD facilitates trade by making sure that all imported and exported goods follow national and international rules. This involves inspecting and clearing goods at various entry and exit points, such as ports and airports. The department also works to prevent smuggling and other illegal activities through strict enforcement measures.
Structure
The top management of the Royal Malaysian Customs Department is led by the Director General of Customs (Turus III) and assisted by 3 deputies, namely, the Deputy Director General of Customs Enforcement/Compliance Division (Jusa A), the Deputy Director General of Customs Customs/Inland Tax Division (Jusa A) and the Deputy Director General of Customs Management Division (Jusa B). In addition to that, there are also two Assistants of Director General for Enforcement (Jusa B) and Inland Tax (Jusa B). The RMCD consists of several divisions, namely the Enforcement Division, the Inland Tax Division, the Compliance Division, the Customs Division, and the Technical Services Division.
Function and responsibility Royal Malaysian Customs Department (RMCD) role is to: Collect national revenue in the form of taxes and customs duties consisting of import duty, export duty, excise duty, sales tax, service tax, extraordinary profit levy, vehicle levy, departure levy, non-tax revenue, state revenue/trust money and tourism tax. Providing trade facilitation in the form of incentives and facilitation to the industrial and commercial sectors that aim to generate the national economy in line with the change in government policy that prioritizes the industrial sector has been prepared by RMCD. Enforce laws and regulations administered by RMCD.
Legislation JKDM has been allocated the authority to enforce the Acts/Regulations as below. The list of legal references is as follows:
Customs Act 1967 & Regulations Dangerous Drugs Act 1952 Excise Act 1976 & Regulations Code of Criminal Procedure Arms Act 1960 Prisons Act 1995 Lockout Rules 1953 Sales Tax Act 2018 & Regulations Service Tax Act 2018 & Regulations Anti-Money Laundering Act 2001 (AMLATFPUAA) Poisons Act 1952 Free Zones Act 1990 & Regulations Law Reform (Abolition of Dark Samsu) Act 1976 Goods and Services Tax Act 2014 & Regulations Tourism Tax Act 2017 Anti-Trafficking in Persons and Anti-Smuggling of Migrants Act 2007 (ATIPSOM) Strategic Trade Act 2010 Prohibition on Imports 2017 Prohibition On Exports 2017 International Trade in Endangered Species Act 2008 (CITES) Wildlife Conservation Act 2010 Merchant Shipping Ordinance 1952 Countervailing Duty and Anti-Dumping Act 1993 Protection Act 2006 Passport Act 1966 Immigration Act 1959/63 Registration of Criminals and Undesirable Persons Act 1969 Evidence Act 1950 Witness Protection Act 2009 Whistleblower Protection Act 2010 Courts of Justice Act 1964 Federal Constitution Other related subsidiary legislation
History
Early history of tax administration Before any Western powers ever set foot in this land, a tax administration system had existed, that is during the heyday of the Malacca and Johor-Riau Sultanate.
In the era of the Malacca Sultanate, maritime and harbour laws existed along with matters pertaining to a tax structure involving the foreign and local merchants. During that period the tax collector and all tax-related matters were the responsibility of the Chief of the Exchequer (Penghulu Bendahari):
" ... the Chief of the Exchequer. (He) controlled all the revenue and Customs Officers and looked after the palace building and equipment". (R.J.W. Wilkinson "The Melaka Sultanate". JMBRAS VOL. XIII-Pt. 2, 1935, p. 31).
The portfolio in charge of tax collection was the harbour master (syahbandar). He was entrusted by the king with the power to enforce rules and Harbour Laws (Undang-Undang Pelabuhan). There were four harbour masters that used to handle traders from all over the world that harboured at the Malacca port:
Harbour masters Handle traders from Harbour Master 1 Gujerat Harbour Master 2 China Champa Ryukyu Islands (From Japan onwards) Harbour Master 3 Kalingga Pegu Bengal Persia (Arabs and European as well) Harbour Master 4 Java Maluku Banda Kalimantan Borneo Pasai Philippines
Tax administration in The Straits Settlements and Federated Malay States
With the establishment of the Straits Settlements (which consisted of Singapore, Penang, Malacca, Labuan and Dinding in Perak) in 1826, tax administration were supervised by a Governor and a Council directly answerable to the Governor General in Calcutta, India who was in turn controlled by the Board of Governors of the East India Company.
Even though the Straits Settlements had been established, a few tax structure and practices applied by the Malay chieftains were retained, for example the Tax Farming system. In this system, a lessee with the highest bid had the authority to collect tax. The lessee was given a license and was subject to specific rules. This facilitated the process of obtaining Excise Duty revenues.
To prevent smuggling, particularly opium, from 1861 onwards the number of police personnel were reinforced and new recruits swelled the ranks.
Even though a Customs and Excise Department had yet to exist, all customs activities were operated by a body called the Government Monopolies. This body was authorised to grant import license and process and sell certain goods such as opium, tobacco, arrack, cigarettes and matches.
At that time, excise duty were imposed on such goods as rice-wine (samsu), toddy and locally made opium whilst customs tax was imposed on opium imported from China, tobacco, cigarettes, liquor and fire crackers.
Government Monopolies, the body that controlled these customs and excise activities existed until 1937 whereby in that year the Straits Settlement Customs and Excise Department was officially launched as H.M. Customs and Excise. Following that, a Revenue Collection Branch and a Preventive Branch were set up to oversee customs and excise activities until 1937.
A station called the Coast Post was set up to place Customs Officers (at that time called Revenue Officers) who will collect tax and monitor commercial / trading activities. The Customs Department collaborated with the Harbour Master, Post Master and Immigration Department to ensure a smooth day-to-day operations.
In 1938 ship raiding were introduced to curb smuggling activities.
H.M. Customs and Excise continued until 1948 up to the extant of the Malayan Union era whereby the Federation of Malaya Customs and Excise Department were then established, covering the entire Malay Peninsula (except Singapore).
Taxation systems in The Federated Malay States Before British intervention in the Malay States and before the Resident System was introduced, there existed a tax administration in Pahang, Perak, Selangor and Negeri Sembilan managed by the Malay chieftains. At that time, the Malay States were divided into several provinces or districts with a chieftain authorised to collect tax over the people. Among the taxes imposed were:
Commodity Taxes imposed Rubber $1.00 per pikul Animal skin $12.50 per pikul Tin $4.00 per bahara Rice $16.00 per koyan Tobacco $2.00 per pikul Opium $4.00 per pikul Oil 10% each type (C.R.J. Wilkinson, Paper on Malay Subjects, O.U.P., London, 1971, p. 13)
The British had taken over tax collection from the local chieftains with the introduction of the Resident system from 1870 to 1880s. Before the formation of State Councils in the states governed by the Resident System, tax collection relied on the discretion of each Resident who is also the Sultan's Advisor. The State Council subsequently would determine all matters related to Customs tax in the states. Among the functions of the council were:" ... Connection with the Government of the country influential natives and others with whom the Government may consult, regarding proposals for taxation, appointments, concessions, the institution or abolition of laws and other matters ...;"Among the new taxes were:
Tin mines lease system with an export tax of $15.00 per bahara and 1/10 for other metals. Farming revenue -2.5% tax. Tax on imported opium. Systematic tax administration activities in the Malay States led to the establishment of the Customs Department. Customs stations were situated at river estuaries and state borders and were in charge of collecting duties on agricultural products, mining, alcoholic beverages, opium and gambier. The management system of the Customs Department varied from state to state.
The management of the department and tax collection were carried out by the clerks in the District Office and State Treasury Office; therefore the Customs Department did not fully manage customs and excise duty. For example, in Telok Anson, Taiping and Kuala Lumpur, tax were collected by the Government Treasurer, whilst at the ports, river estuaries as well as the borders of Perak, Selangor and Negeri Sembilan, tax collection were done by Customs Clerks who were directly responsible to the District Officers in those areas. In Selangor import tax on opium were collected by the Chinese People Affairs Protection Officers.
Customs Union in the Malay States had not existed then. This led to complication in enforcing tariff on goods and differing tax rate in the different states. As a consequence there was a need to form a federation between the Malay States and this basically had been approved by the British Foreign Secretary and Straits Settlements Governor.
With the formation of the Federated Malay States, there were efforts to integrate Customs matters between states. As an outcome, in 1904, a new legislation called the Goods Revenue Enactment Number II was enacted, with the purpose of controlling all Import tax revenue on alcoholic beverages. Under this legislation, the retailer was given a special license to import alcoholic beverages with a fixed rent payment.
On 1 January 1907, a new post of Inspector of Trade and Customs was created. On the same date, a legislation called The Customs Regulations Enactment was introduced with the approval of all four States Legislative Board. In 1908 the title of Inspector of Trade and Customs had been changed to Commissioner of Trade and Customs.
With the existence of this enactment, import and export tax schedules became uniform in the Federated Malay States. A complete integration occurred in 1920 with the establishment of one uniform Customs enactment for the Federated Malay States.
With this integration, Customs stations at the borders were abolished and no tax was imposed if the goods brought from a state to another were from the union. To collect export duty on goods that were brought out by trains, tax collecting stations were established in Singapore in 1918, Prai (1919) and Malacca (1922). The stations were also tasked with collecting duties on imported goods.
The establishment of the Customs Union in the Federated Malay States had harmonised all Customs regulations between the states. In fact, all Customs offices under the Trade Commissioner and Customs Department were responsible directly to the Chief Secretary of the Federated Malay States.
In 1938, the title Commissioner of Trade and Customs was changed to Comptroller of Customs.
The Establishment of Customs Union in the Malay Peninsula In 1931 during the Federated Malay States Rulers Conference or Durbar in Sri Menanti, Negeri Sembilan, the British High Commissioner, Sir Cecil Clementi proposed an expansion of the union. The proposition was based on the annual increase of import tax.