Sales and Services Tax in Malaysia

5 min read|Last Updated: May 10, 2023|

Taxation is a common term for businesses and individuals, with every country imposing its own tax systems. Each country’s tax system has its own advantages and disadvantages – let’s take a look at the Sales and Services Tax (SST), which is required for businesses in Malaysia.

What is Sales and Service Tax?

Sales and Service Tax Malaysia (SST) consists of 2 separate taxes:

  • Sales tax
    The Sales Tax is a single-stage tax that is imposed at import and production levels.

  • Service tax
    The Services Tax is an indirect tax that is imposed on any taxable service which has been provided by a taxable individual in Malaysia and was provided in the name or with the approval of a company.

SST was reinstated on 1 September 2018, and the tax system administered tax rates ranging from 5% to 10%. This was modified in hopes to increase the disposable income of the population due to the lower costs of goods and services. The SST was the tax replacement for GST, which was abolished in June 2018.

How the Sales and Service Tax in Malaysia Works?

As the SST system in Malaysia is a single-stage tax system, goods sold and manufactured by a taxable person will be charged a taxable amount. There is an exception made for the export of goods manufactured, where they will not be subjected to sales tax.

SST returns in Malaysia must be submitted to the Royal Malaysian Customs Department (RMCD) on a bi-monthly basis and relevant records of your SST submission must be kept for at least 7-years for record purposes. These records can either be in English or Bahasa Malaysia.

Goods sold and manufactured by individuals or businesses who are considered taxable in Malaysia will be subjected to sales and valorem tax, including any taxable goods which are imported into Malaysia.

With the introduction of SST, Malaysia enjoyed the advantage of a lower cost of living as sellers pay sales tax at the point of sale only once.

Malaysia Corporate Secretary Liyana

Difference between Sales and Services Tax and GST in Malaysia

Here are the differences between the former GST system in Malaysia and the new SST system which is currently being enforced:

GST in Malaysia SST in Malaysia
Effective in Malaysia on 1 April 2015 Implemented in Malaysia since the 1970s until replaced by GST in 2015-2018, and reintroduced with modifications in 2018
Tax was imposed on each level of distribution (manufacturers, wholesalers, retailers, consumers). Only imposed on the manufacturer and consumer level
Paid input taxes are claimable by businesses No Input Tax credit system for Taxes encountered.
Enabled the curbing of transparency, misappropriation and tax-payment issues Certain importers, manufacturers, wholesalers or retailers could fail to declare their taxes through transfer pricing
The standard charge for GST rates was 6% (it’s not an added tax) Tax rates may vary from 5% to 10% (multiple rates covering different categories of goods and services)
Advantage of this tax is that it is business friendly, and input tax is available upon receipt of the tax invoice Advantage of SST compared to GST is that it is simple, straightforward, no refund issues for business operators, people friendly and it has a focused, narrow scope
Disadvantages include wide coverage, comprehensive, refund issues, eventually imposed on prices sold to the customer, despite having input tax credit, which resulted in cascading prices Disadvantages are that it is a cost to business, and deductions are based on sales (matching principles)
Malaysia Corporate Secretary Liyana

Scope of Taxable Services in Malaysia

In Malaysia, taxable services include the following industries:

  • Advertising
  • Hotels
  • Food and beverage preparation
  • Employment agency
  • Parking and hire car services
  •  Telecommunications
  •  Surveyance
  • Valuation
  • Architectural
  • Engineering
  • Credit cards
  • Electricity
  • IT services
  • Consultancy services
  • Management services
  • Insurance and Takaful services
  • Legal and accounting services
  • Courier and forwarding services
  • Pay TV services
  • Gaming
  • Clubs
  • Motor vehicle repairs

It would be required to register for SST if your business’s taxable goods and service value exceeds the RM500,000 threshold within a 12-month period. However, if you’re operating a manufacturing or import company and your goods are not exempted under the SST, you will be required to pay a sales tax of either 5% or 10%.

How to Register for Sales and Services Tax in Malaysia

If you have a business in Malaysia, you are required to register for SST via the MySST system. All applications will be approved within a 24-hour timeframe if you were an existing GST registrant. In the case that your documents require a verification process, the approval may take slightly longer.

You will automatically be liable for the SST registration if your business was previously registered under the GST system. You may also apply for voluntary registration if your manufactured goods are taxable and below the threshold.

SST in Malaysia must be prepared by companies on an accrual basis and records must be kept in Malaysia for at least 7 years as well. If you would like to keep your records abroad, you must acquire approval from the Director General before you can do so and records can be kept in either hardcopy or softcopy.

Making The Transition to Sales and Services Tax

Businesses under the previous GST tax regime were given time when it came to claiming input tax after the SST was introduced this timeframe was 4 months from the date of the SST introduction. Businesses are required to declare their output tax in their final GST-03 return form.

When to File the Sales and Service Tax Return?

Note that even when there is no tax to be paid, the SST return must still be filed. The taxable period for it is every 2 months. The SST payment must be made within 30 days from the end of the taxable period

The SST can be filed by downloading the Form SST-02 from the MySST portal and mail it to the Customs Processing Centre (CPC) by post. It can otherwide be done online through the CJP system.


Come down to our office or get in touch virtually for a tax assessment.


Is SST better than GST?2021-09-17T16:05:51+08:00

The Sales Tax is only imposed on the manufacturer level, the Service Tax is imposed on consumers that are using tax services. SST rates are less transparent than the GST which had a standard 6% rate, the SST rates vary from 6 or 10%.

What can Paul Hype Page & Co offer to help?2021-09-17T16:05:18+08:00

As your company’s Tax agent, Paul Hype Page & Co Chartered Accountant will be fully responsible for the practice of ensuring that these conditions are met. It is important that we be highly qualified and well versed in local regulations and corporate laws, as we are responsible for the upkeep of important company files, tax reports and tax records.

Is Malaysia an attractive country for Investment?2021-09-17T16:04:48+08:00

Malaysia attracts investments from around the world by reducing its corporate income tax rate and introducing different tax incentives. Malaysia has one of the lowest corporate tax rates in the world.

What is the organisation that governs Malaysia’s tax system?2021-09-17T16:04:13+08:00

IRB (Inland Revenue Board) governs Malaysia’s tax system, helps develop a stronger economy, better environment and a more vibrant economy. All companies, regardless of industry, have a legal duty to pay taxes.

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