CNET : News : Story Tuesday, February 01, 2000 

3Com's Palm is not a computing device, says Malaysian customs
By Jay Chong
Tuesday, February 01 2000

KUALA LUMPUR--Malaysia will continue to impose a 10 per cent sales tax on 3Com Corp's Palm Computing handheld computer as it classifies the device as an "electronic organizer", an official at the Malaysian Royal Customs and Excise Department said Monday.

"Its main functions such as address book, memo pad, scheduler and calculator is that of an organizer. Other functions it offers such as e-mail and browser are supplementary," Tuan Haji Roslan Yusuf, assistant director at the department's technical services division told CNET Malaysia.

Roslan said the department had studied the matter thoroughly before implementing the sales tax which has been imposed on some shipments since last October.

Malaysia abolished tax and import duty on all computers and related accessories in 1996. But it imposes a 10 per cent sales tax on "electronic organizers" and "digital diaries".

Roslan conceded that the department was still willing to listen if vendors are able to prove that the Palm should re-classified. "They can always appeal if they are dissatisfied. We are open to discussion and can re-look the whole thing again," he said.

Palm dealers and users have been upset with the Customs Department re-classification which translates to having to fork out RM200 (about US$53) more for the popular Palm V version of the product usually priced at RM1,299 (US$342).

Ironically, IBM Corp's WorkPad, which is a licensed product of the Palm device with similar features, is imported without the levy, reported In.Tech Online today.

One vendor, who refused to be identified, said the anomaly could be because IBM labels its WorkPad as a "PC Companion" on the box while the Palm is tagged as a "Connected Organizer".

Meanwhile, two Palm distributors in Malaysia are still baffled at the Customs Department 's about-turn.

Ingram Micro (M) Sdn Bhd product manager Winson Wong said the sales tax had been imposed arbitrarily since October last year, although the product has been shipped in tax-free since January 1998.

Ingram swallowed a bitter pill, when it coughed up RM30,000 (US$7,895) in taxes two weeks ago, to release a shipment of 250 units of the popular Palm that had been held up at customs for almost a month.

"Last week, one of two consignments we shipped in was taxed while the other was released without a fuss," said Wong, whose company had shipped in over 8,000 Palm units since January 1998.

Wong claimed no reason was given for the re-classification.

3Com's second Palm distributor here, Servex (M) Sdn Bhd also encountered similar inconsistencies.

Servex's general manager KC Goh said there was no standard procedure in place at the department in processing shipments, implying that individuals were making differing decisions on whether to tax or not.

"Customs should work fast as we are running a business. Delays cost us a lot of money and time is wasted," he said.

Danny Tan, general manager of CompAsia superstore, said that the tax encumbrance was "unfair" and went against the grain of the Multimedia Super Corridor which is aimed at creating a knowledge-based society.

"It does not make sense. In 1996, the government abolished sales tax on all computer-related items. Now, it is re-applying it again. We are going backwards," he said.

Tan said his customers are beginning to lose patience as shipments are delayed while distributors try to sort the tax issue with custom officials.

He added that the Palm is one of the most sought-after products this Chinese New Year especially as gifts from large corporate customers.

The Palm series is described at its Web site as connected organizers, designed as companion products to personal computers that enable mobile users to manage their schedules, contacts and other critical personal and business information on their desktops and remotely.

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