CNET : News : Story Saturday, April 01, 2000 

Malaysian customs changes mind, lifts tax on Palm
By Anita Devasahayam
Friday, March 31 2000

KUALA LUMPUR--The Malaysian Royal Customs and Excise Department has wised up and now recognizes the hot-selling Palm as a computing device instead of an organizer.

A 10 per cent sales tax imposed on the handheld products has been lifted, much to the relief of dealers and buyers.

According to a two-page letter to 3Com South Asia's tax consultants dated March 22, the department has re-classified the Palm V, Palm IIIx and Palm IIIe as a "portable automatic digital processing machine" and therefore, not subject to tax or import duties anymore.

Last October, the department began to arbitrarily impose taxes on incoming shipments of the Palm, although the product had been shipped tax-free since January 1998.

Distributors and dealers were caught offguard, and buyers fumed over the RM200 price hike.

Distributors and dealers claimed they received no prior notice and were stunned that the computing device was re-classified as an "electronic organizer." Similar handhelds like IBM's WorkPad and Compaq's Aero were unaffected.

The move also went against the grain of a government intent on encouraging the use of computing, which had abolished sales tax and import duty imposed on computers and peripherals since 1996.

A customs department spokesman told CNET Malaysia last month that it had "studied the matter thoroughly" before imposing the levy. However, he offered to hear any appeals from distributors.

When contacted today, distributors and users were pleased with the department's about-turn.

"We are definitely happy that the sales tax has been removed. This will give a boost to the popularity of the Palm and make sales here more competitive. We expect our new shipments to be snapped up," said Ingram Micro Sdn Bhd product manager Winson Wong.

Ingram is one of the two Palm distributors in Malaysia, the other being Servex Malaysia Sdn Bhd.

He added that all agents were faxed copies of the letter to avoid unnecessary problems with custom officials in the future.

The Malaysian Palm User Group president Hussin Khan said it was "great news" for its members, which number more than 2,000.

"It will encourage more people to embrace mobile computing devices as part of the their lifestyle and work, and help make new models more affordable," he said.

What makes the abolition of the tax even more significant is Palm's intention to introduce the new 8MB color model Palm IIIc and the Palm Vx here next Tuesday.

An estimated 20,000 units of Palm products have been sold here since January 1998 and the brand is recognized by dealers as the top selling computing product in its category over the last two years.

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