We offer a clear, SME-focused introduction to Sales and Service Tax. SST is a single-stage consumption tax that splits between sales tax on goods and service tax on services. Sales tax applies at 5% or 10%, while service tax generally sits at 6% or 8% depending on the category.
Effective 1 March 2024, most services moved to an 8% rate, with logistics and a few other industries remaining at 6%. The Royal Malaysian Customs Department collects the levy, and businesses remit it; consumers ultimately bear the cost.
We explain how to price, invoice, and file correctly so you avoid overcharging or undercharging clients. You will learn when registration is required, how thresholds apply to Group J activities, and what being a registered person means in practice. We also flag cross-border issues and reliefs for logistics services to help protect your margins.
Key Takeaways
- Understand the split between sales tax on goods and service tax on services.
- Know the applicable rates and the effective date of the 8% shift.
- Recognize who collects and who ultimately pays the levy.
- Learn registration thresholds and implications for registered persons.
- Protect margins with guidance on logistics services, exemptions, and filing timing.
Understanding Service Tax for Logistics and Transportation Goods Services
How the levy splits between services and goods
We clarify the difference between charges on services and duties on physical goods. Service tax applies to prescribed services delivered in-country by a registered person and to imported taxable services. Sales tax covers manufacture or importation of taxable goods and sits at separate rates.
Who pays, who collects, and the role of authorities
Consumers ultimately bear the tax while businesses act as collectors and remit amounts to the malaysian customs department. The malaysian customs office handles registration, audits, and returns, so align invoices and record-keeping with their rules.
| Item | Applies To | Who Remits | Typical Rate |
|---|---|---|---|
| Service charges | Taxable services, logistics, digital provision | Registered person | 6% or 8% (see category) |
| Goods | Manufacture or import of physical goods | Manufacturer or importer | 5% or 10% |
| Imported services | Acquired by businesses in-country | Local person (self-account) | As per service tax |
Practical notes: classify offerings correctly to avoid errors. We explain when a company becomes a registered person and how that changes invoicing, returns, and record-keeping. You can choose to account by invoice date with approval, but the default legal point is receipt of payment with a 12‑month cap.
What Counts as Taxable Services in Transportation and Logistics
We outline which transport and logistics activities now fall within taxable services and how to map them on invoices.
Effective 26 February 2024, Group J expanded to include core logistics and selected maintenance work. This change affects how you price and document the services provided.
- Group J scope: supply chain management, warehousing, freight forwarding, port and airport handling, shipping, aviation, and cold chain.
- Delivery, distribution and transportation goods services — including platform-enabled and e‑commerce fulfilment — are within scope.
- Licensed courier and approved customs agent services are taxable; approved customs agents have a nil registration threshold.
- Maintenance and repair services became taxable in late February 2024; map ancillary maintenance to the correct line item.
| Service type | Examples | Typical rate | Registration note |
|---|---|---|---|
| Logistics services | Warehousing, freight forwarding, cold chain | 6% | Standard threshold applies |
| Maintenance/repair | Equipment upkeep, ancillary site repairs | 8% | Treat as separate taxable supply |
| Courier & customs agent | Licensed courier, approved customs agents | 6% / 8% (case dependent) | Nil threshold for approved customs agents |
We advise service providers to itemise charges clearly. Separate warehousing from freight and note any financial services add‑ons to avoid misclassification.
SST Rates and Effective Dates SMEs Need to Know
Here we map the new percentage rates and critical dates so your billing and contracts stay accurate.
Effective 1 March 2024, most taxable services and digital provision move to an 8% service tax. Certain categories remain at 6%: logistics services, food and beverage (excluding alcohol), telecommunication services, and parking provision. Update your price lists and customer-facing documents to reflect the correct rate.
Credit and charge cards carry an annual levy of RM25 per card, charged per principal and supplementary card. This impacts payment fees and should be reflected in your payment handling and reimbursement policies.
- Segregate 6% and 8% items on consolidated invoices to avoid disputes.
- Update ERP and accounts receivable rules with the March 2024 effective date to reduce manual overrides.
- Add contract addenda where terms cite the “prevailing service tax” to specify the new date and rates.
| Category | Typical Rate | Effective Date | Invoicing Note |
|---|---|---|---|
| Logistics services | 6% | 1 Mar 2024 | Itemise freight, warehousing separately |
| Most other services & digital provision | 8% | 1 Mar 2024 | Apply new rate on receipt of payment unless invoice date option used |
| F&B (non‑alcohol), telecom, parking | 6% | 1 Mar 2024 | Model mixed-service billing to protect margins |
| Credit/charge cards | RM25 per card/yr | Ongoing | Reflect as payment surcharge or absorb cost |
Registration: Who Is a Service Tax Registered Person
Knowing when you must sign up as a registered person keeps compliance simple and predictable. A person is liable to register if the total value of taxable services exceeds the prescribed threshold in any rolling 12-month period.
Thresholds
- The Group J threshold (logistics, delivery and related goods distribution) is RM500,000.
- Approved customs agents face a nil threshold and must register regardless of turnover.
How to register on MySST
- Create a MySST account and verify your business details.
- Complete the online application, attach contracts, invoices, and service descriptions.
- Submit and await the approval letter showing your registration number and effective date.
Approval confirms your status as a tax registered person and includes a summary of ongoing obligations. Prepare SOPs to issue compliant invoices as soon as registration is effective.
Practical tips
- Monitor turnover monthly to spot when you become a person required to register.
- Segment group entities by activity to manage separate registrations where needed.
- Consider voluntary registration if B2B clients demand a tax registered vendor.
We can pre-assess your service lines and recommend timing to limit retroactive exposure and keep your operations audit-ready.
sst for transportation malaysia: Exemptions and B2B Reliefs You Can Use
We map the MOF reliefs and practical steps you can use to claim exemptions on qualifying supply chains. The March 11, 2024 media release narrows the exemption scope to specific export and last‑mile flows. This reduces tax on cross‑border and domestic delivery legs tied to exports.
MOF March 11, 2024 scope
The ministry confirmed exemptions apply to logistics supporting directly exported goods, transshipment, transit, door‑to‑door logistics, and F&B delivery via e‑commerce. Newly registered logistics providers had a one‑month preparation window and must charge tax from 1 April 2024 where applicable.
B2B exemption: onward supply and the freight forwarder example
The B2B relief extends to services provided under the same item. A freight forwarder that acquires freight for onward supply may apply the exemption. Other services acquired—warehousing, port handling, shipping, cold chain—can be exempt when they form part of the same onward supply.
“We recommend clear contractual language and purchase orders that document onward supply to substantiate exemption claims.”
Edge consideration: customs agent services
An unresolved point is whether customs agent services within a forwarding chain qualify when registration categories differ. Until the customs department clarifies, document roles, invoices, and registration statuses carefully.
- Map each leg in door‑to‑door models to the MOF criteria before claiming exemption.
- Onboard suppliers with checks on item alignment and registration to support the same‑item test.
- Retain evidence packs: export permits, airway bills, bills of lading, and delivery confirmations to defend claims in audits.
| Relief | Scope | Action |
|---|---|---|
| Export/transit exemption | Logistic services for directly exported goods, transit, transshipment | Keep export docs; include export reference on invoices |
| Door‑to‑door & e‑commerce F&B | End‑to‑end delivery where MOF criteria met | Map each leg; record contracts and proof of delivery |
| B2B same‑item exemption | Onward supply chains (e.g., freight + warehousing + cold chain) | Use clear onward‑supply PO terms; capture supplier registration |
| Customs agent edge case | Services obtained within forwarding chain with mixed registrations | Seek clarification; document service flow and registration types |
Billing, Taxable Periods, and Payments to RMCD
Knowing when tax crystallises helps you avoid surprise liabilities. The basic rule is simple: service tax becomes due when you receive payment for taxable services.
If you do not get paid, the obligation arises at the latest 12 months after the provision date. Businesses may apply to the malaysian customs department to account on invoice date instead of payment date.
Filing cycle and varying your period
Registered persons file SST-02 every two months. Returns and payment are due by the last day of the month after the taxable period ends. A taxable person may apply to vary that period to match billing seasonality.
Practical controls and penalties
Use an AR close calendar, internal cutoffs, and reconciliations tying ledger entries to SST-02 totals. Map retainers and milestone invoices so you do not tax the same value twice.
“Maintain clear invoice dates and receipts to defend timing choices in an audit.”
| Item | Impact | Action |
|---|---|---|
| Late payment tiers | 10% (1–30d), +15% (31–60d), +15% (61–90d), max 40% | Build cash buffers; pay by due date |
| Invoice basis | Invoice date option with approval | Apply to malaysian customs department; document approval |
| Billing complexity | Milestones, retainers, multi-leg services | Reconcile payments to services provided; avoid double counting |
Imported Taxable Services, Digital Services, and Cross-Border Considerations
Imported services create a distinct reporting duty that changes how you record and pay tax. Any person carrying on business locally must self-account on tax imported services via SST‑02A. The filing requires clear source documentation and an entry that aligns with your ledger.
Tax point: tax is due at the earlier of payment or the invoice receipt date. That rule prevents timing errors and helps you plan cashflow. Keep receipts and supplier invoices to support the date chosen.
When businesses must self-account on imported services (SST‑02A)
Use SST‑02A to report service tax on inbound supplies. You must report the value, applicable rate, and the date the obligation crystallised. Reconcile SST‑02A to your payment runs before month‑end.
Foreign digital providers and local logistics platforms
Foreign registered providers supplying digital services to local consumers file quarterly. Tax is due on receipt of payment, but there is an option to account by invoice date with approval. If your logistics platform buys SaaS, routing, or marketplace tools abroad, assess whether the provider or you must account.
“Treat inbound digital and professional services as high-risk areas in your month‑end checks.”
- Designated Areas and Special Areas have special treatment; map movements and warehousing locations when assessing liabilities.
- Insert contract clauses requiring suppliers to state their tax treatment and registration status.
- Use internal coding to separate imported services from local services for accurate reports.
| Issue | What to check | Action |
|---|---|---|
| Tax point | Payment date vs invoice date | Choose earlier date; retain evidence |
| Digital providers | Quarterly filing, evidence of consumer location | Collect proof of customer residence; file quarterly |
| Cross-border logistics | Overseas warehousing support, routing fees | Map flows; avoid double taxation with clear contracts |
Finance checklist before filing SST‑02A:
- Match supplier invoices to payments and ledger codes.
- Confirm tax point and retain supporting documents.
- Validate supplier registration statements and contract clauses.
- Flag Designated or Special Area movements and adjust entries.
Compliance Roadmap for SMEs: Avoiding Penalties and Leveraging Reliefs
We provide a compact action plan to keep your accounts accurate and cash protected. Clear steps reduce errors when filing and help reclaim legitimate refunds.
Late payment tiers and bad debt refunds
Penalties escalate on a 90‑day ladder: 10% in the first 30 days, +15% for days 31–60, and +15% for days 61–90 (max 40%).
We advise calendar triggers and approval gates to prevent each tier from being reached.
Registered persons may apply to recover service tax on bad debts if they show reasonable recovery efforts and write‑offs.
Onboarding newly registered providers
The ministry gave a one‑month preparation runway; charging began 1 April 2024. Use that model to build future onboarding playbooks.
- Set a go‑live checklist with invoice templates and effective date validation.
- Train billing teams on which services attract which rate and how to mark a service tax registered vendor.
B2B strategies to limit tax leakage
Map multi‑leg flows and document services acquired that form the same‑item onward supply, such as freight, warehousing, port, shipping, and cold chain.
We recommend an exemption validation workflow with retained evidence, approvals, and periodic reviews by finance.
| Focus | Action | KPI |
|---|---|---|
| Period controls | Quarterly calendar, SST-02 alignment | On-time filings % |
| Bad debt recovery | Documented collection attempts, refund claims | Recovery rate |
| Exemption checks | Supplier attestations and export docs | Exception rate |
“Embed tax clauses into contracts and monitor outcomes monthly.”
We can run a health check to spot missed exemptions, overcharges, and process gaps. That saves time and reduces penalty risk.
Conclusion
,To finish, we highlight immediate actions that secure compliance and protect margins across logistics and related services.
We summarise clear next steps: map your rates, confirm registration status, and fix billing templates so each service and charge shows the correct tax. Keep periods and due dates aligned with your calendar.
Strengthen controls by training teams, documenting onward‑supply chains, and collecting export evidence to support exemptions and B2B reliefs.
If you are a service tax registered person, we can review contracts, test invoice flows, and close gaps. Contact us to assess your business, remediate risks, and build a scalable compliance framework for your industries.
FAQ
What is the scope of service tax for logistics and transportation goods services under Malaysia’s SST?
Service tax applies to specified services, not goods. Under Group J, taxable services include logistics, distribution, delivery, transportation of goods, courier services, and customs agent services. From March 2024, certain logistics, maintenance and repair services were clarified as taxable. The Royal Malaysian Customs Department (RMCD) administers the tax and enforces registration, collection, and reporting rules.
Who ultimately bears the service tax and who must collect it?
The end customer bears the tax, but the service provider collects and remits it to RMCD. If you are a tax-registered person providing taxable logistics services, you must charge the applicable rate on invoices and submit returns. For imported services, the recipient may need to self-account under SST rules.
Which services were newly included or clarified as taxable from March 2024?
The March 2024 update expanded clarity to include broader logistics services and certain maintenance and repair activities linked to goods movement. Digital platforms that coordinate physical delivery may also intersect with these rules, depending on the commercial arrangement and place of supply.
What are the SST rates SMEs must apply and when did they take effect?
Logistics services under Group J generally attract a 6% service tax. From March 2024, many other services moved to an 8% rate. Check RMCD guidance for exact effective dates for specific service categories and transitional rules for contracts spanning the change.
What is the RM25 card-specific levy and how does it affect payment flows?
A RM25 levy applies to certain card-specific services and affects how payment service providers and merchants account for fees. Businesses should review contracts with payment processors to determine who bears the levy and how it is reflected on invoices and reconciliation.
At what turnover must a business register for service tax for logistics and related services?
Thresholds for Group J are generally RM500,000 annual taxable turnover. If your taxable supplies exceed this threshold in a 12-month period, you must register as a service tax registered person and begin charging tax from the effective registration date.
How do we register for service tax on MySST and what does approval include?
Register via the MySST portal. You will provide business details, nature of services, and turnover projections. Once approved, RMCD issues a registration number and you must start issuing tax invoices, file SST-02 returns, and remit collected tax according to your taxable period.
Which exemptions and B2B reliefs are available to logistics businesses?
Exemptions include exports, transshipment, transit, door-to-door cross-border movement, and certain food & beverage e-commerce delivery services as outlined by the Ministry of Finance on March 11, 2024. B2B reliefs may cover onward supply and identical-item transactions; freight forwarder arrangements often qualify for onward supply treatment when proper documentation is maintained.
How does the B2B exemption work for freight forwarders and customs agents?
When a freight forwarder supplies services onward to another registered taxable person for the same goods and proper supporting documents exist, the supply may be relieved from tax under B2B rules. Customs agent services embedded in the forwarding chain need careful treatment to determine whether exemption or standard tax applies.
When is service tax due — on receipt of payment or by the 12-month rule?
Service tax is generally due on payment receipt, but businesses may elect to account by invoice date. The 12-month rule refers to turnover calculation for registration thresholds. Choose the accounting method consistently and record it in your SST procedures.
What are the filing and payment requirements for SMEs?
Registered persons typically file SST-02 returns bi-monthly and remit tax by the due date shown on the portal. You may apply to vary your taxable period, subject to RMCD approval. Maintain timely filings to avoid penalties.
How do businesses self-account for imported taxable services?
If you acquire taxable services from overseas without a local supplier, you may need to self-account using SST-02A. This requires declaring the imported service value and accounting for output tax while claiming input tax relief where eligible and documented.
How are foreign digital service providers and local logistics platforms treated?
Nonresident digital service providers supplying taxable services to Malaysia may be required to register and charge service tax. Local marketplaces or platforms that coordinate logistics need to evaluate whether they act as service providers or intermediaries, which affects registration and tax collection responsibilities.
What penalties apply for late payment or noncompliance?
RMCD imposes tiered penalties for late payment and late filing. Penalties increase with delay length and may include fines and interest. Newly registered providers should use the one-month preparation window to update billing, accounting, and reporting systems to avoid penalties.
How can SMEs manage bad debt refunds and reduce tax leakage?
Keep accurate records of invoices, payment attempts, and credit notes. If a taxable supply becomes irrecoverable, you may apply for bad debt relief under RMCD rules. Implement B2B strategies—such as clear contractual terms and documented onward supply chains—to reduce duplicate taxation and leakage across the supply chain.
What practical record-keeping practices should businesses follow to stay compliant?
Maintain detailed invoices showing service tax separately, retain contracts, proof of export or transshipment where exemptions apply, reconciliation of payment processor fees, and evidence for B2B reliefs. Regular internal audits and timely MySST filings help prevent disputes and penalties.
When do newly registered providers need to be ready to charge tax?
After RMCD approves registration, you typically have one month to prepare systems, issue tax invoices, and begin charging service tax from the go-live date specified in your approval. Use this window to update pricing, contracts, and accounting processes.
What should SMEs consider for cross-border supply chains to minimize tax exposure?
Document the place of supply, shipping terms (Incoterms), export evidence, and whether services are bundled with goods. Structure contracts to clarify who is the taxable person and use B2B reliefs when moving services onward between registered persons to limit tax costs.
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.
