SST in Malaysia — Simple guide for businesses
Clear, practical steps to register, charge and file SST in Malaysia. Examples use MYR; local context throughout.
Practical SST guidance for Malaysian businesses
Below is a clear, localised overview of Sales & Service Tax (SST) — what it is, who registers, rates, invoicing and filing tips with MYR examples.
Sales tax vs Service tax — quick explanation
Sales Tax is usually charged on taxable goods at the manufacturer or import stage. Service Tax applies to specified services supplied in Malaysia (for example, hotels, restaurants and some professional services). The two are administered differently — classify your supplies early to avoid mistakes.
Who must register?
Registration depends on activity and turnover. Service providers and manufacturers have separate rules. Use a rolling 12-month turnover test — if you expect to exceed the threshold, register sooner rather than later.
- Service Tax: threshold applies to taxable services
- Sales Tax: applies to manufacturers/importers
Typical filing steps
- 1 Register on MySST and keep your registration number
- 2 Keep invoices and records in MYR
- 3 Submit returns (monthly/quarterly) and pay on time
Different Types of Malaysia SST Rates
Malaysia uses different SST rates depending on the type of goods and services. Here's a simple breakdown:
Sales Tax Rates
- 5% Rate: Construction materials, some food items, petroleum oils, selected imported goods like certain fruits and premium seafood (effective July 2025)
- 10% Rate: Standard rate for most taxable goods and imports, luxury items, high-end bicycles, essential oils, antique artworks
Service Tax Rates
- 6% Rate: Food & beverage, telecommunications, parking, logistics, construction, private healthcare (for foreigners), private education (for international students)
- 8% Rate: Most other services including professional services, financial services, rental/leasing
Important Update: From July 2025, over 4,800 previously zero-rated or exempted goods are now taxed at 5%. There's a penalty-free grace period until December 31, 2025, for businesses to comply with new rules.
Malaysia SST Exemptions List
Essential items remain exempt from SST to keep basic needs affordable for everyone:
Food Staples
- • Rice, chicken, beef
- • Vegetables, eggs
- • Local fish (selar, tongkol, cencaru, sardines)
- • Selected imported fruits (apples, oranges, dates)
Essential Items
- • Books and educational materials
- • School supplies
- • Medicines and pharmaceuticals
- • Basic building materials
Export Goods
- • Goods manufactured for export
- • Zero-rated for international trade
Service categories and rates (updated July 2025)
This table shows the updated service categories and their rates. Always confirm current rates on official RMCD schedules. Click here for more detail.
| Group | Sector Description | Key Change | Threshold | Rate | Effective Date |
|---|---|---|---|---|---|
| A | Accommodation | Services relate to private healthcare service excluded from taxable service under Group A | RM 500,000 | 6%/8% | 1 July 2025 |
| B | Food & Beverage (F&B) | Stall space rental now taxable | RM 1,500,000 | 6%/8% | 1 July 2025 |
| C | Wellness & EntertainmentCentre | Will not be expanded to beauty service (pending MOF’s finalisation of the scope) | RM 500,000 | 6%/8% | 1 July 2025 |
| D | Private Clubs | Services relate to private healthcare service excluded from taxable service under Group D | RM 500,000 | 6%/8% | 1 July 2025 |
| E | Golf Clubs & Driving Ranges | Broader scope, more services taxableRent out of commercial property owned by golf club which located separately from golf club premise also taxable. | RM 500,000 | 6%/8% | 1 July 2025 |
| F | Betting and Gaming | No significant change | - | 8% | - |
| G | Professional Services | Financial consultation services, financial management service, financial digital services moved to Group I | RM 500,000 | 8% | 1 July 2025 |
| H | Financial Services | Major expansion (insurance, digital, remittance) | RM 1,000,000 | 8% | 1 July / 1 Sep 2025 |
| I | Other Service Providers | Inclusion of private healthcare services* as newly taxable service | RM 500,000 / RM 1,500,000* | 6%*/8% | 1 July 2025* |
| J | Logistic services | No significant update | RM 500,000 | 6% | - |
| K | Rental or Leasing | Now includes all tangible asset rentals | RM 1,000,000 | 8% | 1 July 2025 |
| L | Construction | Most construction now taxable (except housing accommodation and public facilities approved by the local authorities solely as residential buildings) | RM 1,500,000 | 6% | 1 July 2025 |
| M | Education | Applies to high-fee non-government schools and non-citizen | No threshold (RM 60k/student or non-citizens) | 6% | 1 July 2025 |
Invoicing: what to show
Proper invoicing prevents disputes and ensures compliance. Include these essential details:
Required Fields
- Supplier name & SST number
- Invoice number & date
- Description of goods/services
Amount Breakdown
- Taxable amount in MYR
- SST amount shown separately
- Total amount due
Industry-specific notes
Different sectors have tailored SST rules and considerations.
Digital services
Rules depend on place-of-supply; non-resident suppliers may have registration obligations for Malaysian consumers.
E-commerce marketplaces
Check whether the marketplace or seller is the SST supplier — platform contracts and terms matter.
Hospitality & F&B
Accommodation and restaurant services are commonly taxable — show SST separately on customer bills.
SST registration checklist
- Company registration details (SSM)
- Business nature and description of supplies
- Latest 12-month turnover summary (MYR)
- Sample invoices and contracts
- Bank details for payments
Need help to check for eligibility, SST registration, or organizing the necessary documents?
We can help
SST eligibility check, document review, and more — we are here to assist at a very affordable price!
Contact us!SST Penalties and Compliance
Understanding the penalties for non-compliance is crucial for all businesses under the SST framework.
Non-Submission of SST Returns
Failing to file your SST returns on time can result in serious penalties:
- Fine up to RM50,000
- Prison term up to 3 years
- Or both fine and imprisonment
Non-Payment of SST Dues
Failure to pay your SST obligations carries similar heavy penalties:
- Fine up to RM50,000
- Imprisonment up to 3 years
- Or both penalties combined
Late Payment Penalties
The longer you delay payment, the higher the penalty rate becomes:
| Late Payment Duration | Penalty Rate |
|---|---|
| 1-30 days | 10% |
| 31-60 days | 15% |
| 61-90 days | 15% |
| 91 days and above | Maximum 40% |
Good News: A penalty-free grace period is in effect until December 31, 2025, for businesses genuinely making efforts to comply with the new rules. Take advantage of this time to get your SST compliance in order!
Tips to Avoid Penalties
- Set up automatic calendar reminders for filing deadlines
- Keep accurate records throughout the year
- Register early if approaching the threshold
- Use professional accounting software
- Consult with SST advisors when unsure
- Pay taxes promptly to avoid accumulating penalties
Frequently asked questions
What is SST in Malaysia and who pays it?
SST combines Sales Tax and Service Tax. Businesses that manufacture taxable goods or provide listed taxable services and exceed registration thresholds must register and collect SST from customers.
When do I need to register for SST?
Register when your taxable turnover exceeds the statutory threshold over a 12-month period. If in doubt, consult JKDM or a local SST/tax advisor. Early registration helps avoid penalties.
What are the current SST rates in Malaysia?
Service Tax is typically 6% on taxable services like hotels and restaurants. Sales Tax varies by product category (often 5% or 10%). Always verify current rates with JKDM schedules as they can change.
What must appear on an SST invoice?
Include supplier name, SST registration number, invoice date and number, clear description of goods/services, taxable amount in MYR, and SST amount shown separately. This reduces audit risks.
Can I claim SST refunds or input credits?
Generally no — SST is not a credit-based VAT system like GST. You cannot usually offset SST paid on purchases against SST charged. Check for special cases and transitional measures with JKDM.
Are digital services to Malaysian consumers subject to SST?
Possibly — if the service falls under taxable categories and place-of-supply rules apply to Malaysia. Non-resident suppliers should verify registration obligations and withholding requirements.
How often do I need to file SST returns?
Filing frequency depends on your registration type — typically monthly or quarterly. JKDM will specify your schedule. Always check your registration letter for exact due dates.
What penalties apply for late SST filing?
Late filing and payment attract penalties and interest charges. Repeated non-compliance can lead to higher fines and enforcement action. Check current penalty structures with JKDM.
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Useful links & compliance notes
Disclaimer: The information provided on this website is intended for general informational purposes only and does not constitute professional, legal, tax, or financial advice. While every effort has been made to ensure the accuracy and reliability of the content at the time of publication, regulations, policies, and requirements may change without prior notice. We make no representations or warranties, express or implied, about the completeness, accuracy, or suitability of the information for any particular purpose. We shall not be held responsible for any loss, damage, or inconvenience arising from the use or reliance on this information. Please refer to official Lembaga Hasil Dalam Negeri Malaysia (LHDN) and official RMCD sources for the most current regulatory updates and seek professional advice when necessary.