Confused About SST Charges? Here’s How It Works in Malaysia

We walk you through the Sales and Service Tax so you can price, invoice, and comply with confidence. This single-stage system applies sales tax at the manufacturing or import stage for goods and a service tax when services are provided.

Consumers ultimately bear the tax, while registered businesses collect and remit payments to the Royal Malaysian Customs Department. As of March 2024, most services are taxed at 8%, with selected sectors such as food and beverage, telecom, logistics, and parking at 6%.

Sales tax on taxable goods is typically 5% or 10%. Essential items like rice, chicken and medicines are exempt or zero-rated, and selected imported fruits will join exemptions from July 2025. Registration normally kicks in once annual turnover passes RM500,000, with some new service categories using higher thresholds from July 2025.

We focus on practical steps: check your turnover, register via MySST, update quotations and invoices, and document compliance to benefit from the penalty-free window through December 31, 2025.

Key Takeaways

• Understand the split: sales tax on goods, service tax on services, and who pays.
• Know current rates—8% for most services, 6% for specific sectors.
• Identify exempt or zero-rated goods to avoid incorrect billing.
• Register when turnover thresholds are met and use the MySST portal.
• Use the penalty-free period to document genuine compliance efforts.

What Is SST and Who Really Pays It?

Tax is imposed one time in the supply chain, which results in end users bearing the cost in retail prices.

SST is a single-stage consumption tax reintroduced on 1 September 2018 to replace GST. Sales tax targets taxable goods at manufacture or import, while service tax applies to specified services performed by registered persons.

Single-stage tax: how sales tax and service tax apply

The single-stage design reduces cascading because tax is charged once, not at every sale. This contrasts with multi-stage VAT/GST systems that tax value at each step.

Consumers vs. businesses: collection and remittance to RMCD

Consumers pay the levy via final prices. Your role as a registered business is to collect and remit accurately to the Royal Malaysian Customs Department.

• Define taxable points: sales tax at manufacture/import; service tax when services are performed.
• Check whether your supplies fall under prescribed taxable services and register when required.
• Keep evidence—contracts, timesheets, and delivery notes—to show whether services provided are in or out of scope.
• For imported taxable services, self-accounting may create liabilities even if you are not registered.
• Structure invoices and your chart of accounts to separate sales tax and service tax for clear reporting and RMCD audits.

Sales Tax vs. Service Tax: The Core Differences

We separate the rules so you can map your product and service lines to the correct regime and set prices with confidence.

When sales tax applies to taxable goods and imports

Sales tax is charged at manufacture or on import. The typical rates are 5% or 10% depending on the tariff heading.

The taxable person is usually the manufacturer or the importer. For imports, tax is collected at customs and requires accurate import documentation for clearance and accounting.

When service tax applies to taxable services provided

Service tax applies to specified services rendered by registered persons. From 1 March 2024, most services are taxed at 8%, with some sectors maintained at 6% or subject to specific levies.

“Correct coding and clear invoices reduce disputes and compliance risk.”

• Segregate accounting entries for goods and services.
• Test offerings against the First Schedule to confirm taxable status.
• Use ERP product/service codes and review incoterms in contracts.

Current SST Rates and What Changed in March 2024

Rate adjustments that took effect on 1 March 2024 affect how you invoice and report service supplies. We summarise the practical impacts so you can update pricing, ERP codes, and customer notices without delay.

Sales tax at 5% or 10% on taxable goods

Sales tax applies at either 5% or 10% depending on tariff classification. Determine which rate fits your goods by checking customs headings and supplier invoices.

Service tax at 8% for most services as of March 2024

From 1 March 2024 the standard service tax rate is 8% for most services, including many digital supplies. Update invoice templates and pricing models to reflect the new rate immediately.

Services still at 6%: food and beverage, telecommunication, logistics, parking

Certain categories remain at 6%: food beverage services (non-alcoholic), telecommunication, logistics, and parking place services. Note the RM25 per year levy for charge and credit card services when you review contracts with payment providers.

• Confirm whether your supplies are taxable and map each SKU or service code to the correct rate.
• Run cutover controls for transactions straddling the 1 March 2024 effective date.
• Document the rationale for applying 6% to specific services to support audits.

Understanding SST Charges Malaysia: What It Covers Today

We map the service lines that commonly attract service tax so you can price, contract, and onboard suppliers correctly.

Common taxable services

Professional services are squarely in scope. This includes legal, accounting, engineering and architecture.

IT services, management services, consultancy, training and security also count as taxable services provided to local clients.

Newly included services (effective 26 February 2024)

Late February additions broadened the net. Karaoke, brokering and underwriting (non-financial) and maintenance/repair are now taxable.

These changes can affect service agreements and price lists. Update MSAs and SOWs accordingly.

Logistics, digital and platform services

Logistics is treated end-to-end: warehousing, freight forwarding, port/airport handling, shipping/aviation, cold chain and last-mile distribution.

Digital services and electronic platform services provided by foreign providers to local consumers are also within scope. Foreign businesses may need to register and charge the service tax.

• Map each offering to a taxable category before launch.
• Use supplier questionnaires to capture whether services provided are taxable and at what rate.
• Include tax gross-up and customer-location clauses in contracts to handle rate changes and cross-border supplies.

“Review bundled offers—software plus support or training—and allocate the price to each component to apply the correct tax treatment.”

Exemptions, Zero-Rating, and Essential Goods

Certain everyday goods are zero-rated or exempt to reduce the cost of living for local households.

What is covered

Key essentials include rice, chicken, beef, vegetables, eggs, and local fish species such as selar, tongkol, cencaru, and sardines.

Books, educational materials, medicines, pharmaceuticals, and basic building materials are also exempt or zero-rated. Goods manufactured for export are exempt.

Updates and practical steps

• From 1 July 2025, selected imported fruits (apples, oranges, mandarins, dates) join the exempt list—update catalogs and item masters promptly.
• Set product masters to reflect exemption or zero-rating for food, books, medicines, and local fish to prevent incorrect billing.
• Validate commodity codes for building materials against exemption schedules before applying any tax treatment.
• Keep export documentation—commercial invoices, bills of lading, and customs papers—to substantiate exempt exports.
• Separate exempt and taxable lines on invoices to support clear audit trails and avoid misreporting.

“Treat exemptions as active controls: update systems, confirm supplier declarations, and communicate price changes to customers.”

How to Register for SST on the MySST Portal

Use the Mysst portal to turn turnover figures into compliance: register, confirm your effective date, and update systems.

Who must register: thresholds for goods and services

Generally, you must register when the total value of taxable goods manufactured or taxable services provided in any rolling 12-month period exceeds RM500,000. Higher thresholds apply to selected services from July 2025.

Step-by-step: forms, approval, registration number, effective date

Visit www.mysst.customs.gov.my, create an account and complete the online form. Upload SSM documents, director IDs and bank details.

Approval is immediate. The portal issues an sst registration number and shows the effective date. An approval letter is emailed for your records.

Separate registrations for sales tax and service tax

Sales tax and service tax require distinct registrations. Keeping separate records simplifies returns and billing templates.

• Monitor rolling 12-month totals so you know when you must register.
• Foreign digital providers supplying local consumers must register if turnover exceeds RM500,000.
• Assign a data owner to update templates with the registration number and effective date.

Industry Checkpoints: How-To for Key Sectors

Sectors differ widely in how tax applies, so we give practical checkpoints for common industries. Follow these steps to align pricing, systems, and contracts with current rules.

Food & beverage operators

Restaurants and similar venues face a 6% service rate and a RM1,500,000 registration threshold for restaurants. Confirm which outlets in your group meet the threshold and must register.

Configure your POS to apply 6% to taxable food and beverage services only. Exclude alcoholic sales where appropriate and show lines separately on receipts.

Telecommunication and parking

Telecommunication subscriptions, usage fees and value-added packages use the 6% rate. Ticketing and monthly recon reports help reconcile collections.

Parking operators should integrate the rate into ticketing systems and run monthly reconciliations to spot missing items.

Logistics

Logistics services — warehousing, freight forwarding and distribution — are taxable once the RM500,000 threshold is met. Maintain bills of lading, warehouse receipts, and service orders to evidence taxable supplies.

If you expect to cross the threshold, prepare to register and keep rolling 12‑month reports to support timing.

Manufacturing and imports

Manufacturers and importers apply sales tax at 5% or 10% to taxable goods at manufacture or import. Use HS classification controls and supplier declarations to validate rates.

“Use supplier/customer declaration templates and contract clauses to manage mixed supplies and tax pass‑throughs.”

• Systems: update SKU and service masters for correct tax lines.
• Controls: run sector-specific internal audits quarterly.
• Documentation: keep registration evidence and threshold calculations on file.

Billing, Returns, and Payments: Getting Your SST Right

Accurate billing and timely filings keep your business compliant and cash-flow steady. We focus on invoice particulars, filing cycles, and payment dates so you avoid surprises when reporting to the Malaysian Customs Department.

Invoicing requirements and prescribed particulars

Invoices must state the description of taxable or digital services, the total amount excluding tax, and the amount of service tax. Electronic issuance is allowed.

Service tax becomes due when payment is received or immediately after 12 months from provision. You may apply to RMCD for invoice-date accounting approval.

Taxable periods and returns

Registered persons file SST-02 and pay every two months by the last day of the following month. The bi-monthly period cadence helps align cash flow with payment obligations.

Imported taxable services and foreign digital providers

Non-taxable persons acquiring imported taxable services report via SST-02A monthly, due by the last day of the month following the due date. Foreign registered digital service providers file and pay quarterly by the last day of the month following each taxable period.

“Standardise invoices, calendarise return cutoffs, and reconcile daily to reduce errors.”

• We standardise invoice templates with all prescribed particulars for services and service tax amounts.
• We set up a calendar of due dates, cutoffs, and review checkpoints on MySST portal access.
• We reconcile invoices to the general ledger and document exceptions like credit notes and bad debt relief.

Penalties, Late Payment Rates, and 2025 Grace Period

Late filings and unpaid amounts carry material legal and financial risks for businesses and executives.

Non-submission and non-payment offenses

Failure to submit returns or to pay service tax can lead to fines up to RM50,000, imprisonment for up to three years, or both. We stress executive accountability and recommend clear sign-offs to reduce exposure.

How late payment penalties escalate

Late payments attract stepwise penalties. The bands are designed to push prompt settlement and protect public revenue.

Using the grace period and practical controls

A penalty-free grace period runs through 31 December 2025 for businesses genuinely working to reach compliance. We advise documenting remediation plans, training teams on recordkeeping, and keeping a monthly dashboard of filings, payments, and outstanding items.

• Establish escalation workflows to avoid moving into the next penalty band.
• Delegate payment authority to prevent bottlenecks that cause penalties.
• Record RMCD correspondence and preserve evidence of good‑faith efforts during the grace period.

What’s New from July 2025: Expanded Service Tax Coverage

Starting 1 July 2025, new categories enter the service tax net. We summarise practical impacts so you can update contracts, pricing, and billing systems before the effective date.

Rental and leasing

Rate: 8% with a RM1,000,000 registration threshold. Exemptions include residential rentals, reading materials, financial leasing, tangible assets delivered outside the country, and certain supplies in Special/Designated Areas.

Construction

Rate: 6% with RM1,500,000 threshold. Federal and state government projects are exempt. A temporary penalty waiver runs until 31 December 2025.

Non-reviewable contracts signed before 9 June 2025 may remain exempt until 30 June 2026. Keep signed award letters and timestamps as evidence.

Education, financial and healthcare

Education attracts 6% if annual per-student fees exceed RM60,000. Special education schools, language centres, Malaysian students and OKU cardholders are generally exempt.

Financial services move to 8% with RM1,000,000 threshold; an RM25 annual levy applies to charge and credit cards. Fee and commission income should be reviewed for inclusion.

Healthcare for non-citizens is taxable at 6% with a RM1.5m trigger; public and university facilities remain exempt in most cases.

“Act now—revise contracts, update masters, and train teams to ensure compliance from day one.”

B2B Reliefs, Intra-Group Services, and Special Areas

B2B reliefs can stop double taxation when one registered business buys professional or advertising services from another registered supplier. We explain the conditions, required records, and how to apply relief at invoice level.

B2B exemptions for professional, advertising, and logistics services

Certain B2B exemptions exempt a buyer from paying service tax where both parties are registered and the supply fits the prescribed category. Keep supplier registration proof and a clear service description to support the claim.

Intra-group relief for qualifying services and digital services

Intra-group relief may cover qualifying professional services supplied inside a corporate group, cross-border acquisitions of qualifying services, and digital services within a qualifying group. Document group structure and inter-company agreements.

Designated and Special Areas: how treatment can differ

Designated Areas (Labuan, Langkawi, Tioman, Pangkor) and Special Areas (free zones, licensed warehouses, LMWh, JDA) often have unique treatment for goods and services. Map supply chains and flag masters in your ERP to automate correct treatment.

• We implement AP/AR checks to detect supplier registration and apply the correct B2B treatment.
• We advise approved customs agents on registration and release-of-goods obligations.
• We recommend periodic audits, contract reviews, and team training to sustain relief eligibility.

“Accurate records and clear service descriptions make relief defensible in an RMCD review.”

Conclusion

A focused compliance plan turns changing sales tax service rules into manageable operational tasks. We recap the single‑stage framework: sales tax applies at manufacture or import while service tax covers most services. Update pricing and ERP masters so sales services tax and sales tax service lines remain accurate for goods and services.

We recommend a short SST health check: map products and taxable goods, confirm registration, revise invoices, and calendarise returns. Use the penalty‑free window through 31 December 2025 to document changes and train teams.

Act now—align finance and tax owners, tighten controls, and monitor RMCD updates. We can support a tailored review, sector training, and ongoing compliance to keep your business secure.

Disclaimer:

The information shared in this post is for general educational and reference purposes only. It does not constitute professional advice. Regulations and requirements may change from time to time. For guidance specific to your situation, please consult with our firm or a qualified professional.