Malaysia’s Sales and Service Tax (SST) is two separate single-stage taxes, not a value-added tax (VAT). There is no input tax credit, so the tax embeds as a cost in your prices. In 2026, the standard service tax rate is 8%, sales tax is 5% or 10%, and the 2025 compliance grace period ended on 31 December 2025.
The Royal Malaysian Customs Department (RMCD) administers SST and publishes the binding rules on the official MySST portal. This guide covers the rates, taxable goods and services, the July 2025 expansion, registration thresholds, filing, penalties, and e-invoicing that apply in 2026.
What Is Malaysia’s Sales and Service Tax (SST)?
SST is two distinct single-stage taxes administered together by RMCD. Sales Tax applies to goods at the point of manufacture or import. Service Tax applies to prescribed services supplied by registered businesses. Both were reintroduced on 1 September 2018 under the Sales Tax Act 2018 and the Service Tax Act 2018, replacing the 6% Goods and Services Tax (GST).
Section 8 of the Sales Tax Act 2018 imposes tax on taxable goods manufactured by a registered manufacturer or imported into Malaysia. Section 7 of the Service Tax Act 2018 charges tax on taxable services provided in Malaysia by a registered person. There is no input credit in either tax, which is the core difference from a VAT.
How Is SST Different From GST?
Malaysia has no GST today. GST ran at 6% from 1 April 2015, was zero-rated on 1 June 2018, and was repealed on 1 September 2018 when SST returned. GST was multi-stage with recoverable input credits. SST is single-stage with no credit, so tax becomes an embedded cost rather than a pass-through.
| Feature | GST (2015–2018) | SST (since 2018) | Source |
|---|---|---|---|
| Stages taxed | Multi-stage, every step | Single-stage, at manufacture/import or service supply | Sales Tax Act 2018, Act 806 (RMCD) |
| Input tax credit | Yes, recoverable | No, becomes embedded cost | RMCD General Guide |
| Standard rate | 6% | 5%/10% goods; 6%/8% services | RMCD rate orders |
| In force | 1 April 2015 (Act 762) | 1 September 2018 (Acts 806/807) | Laws of Malaysia, Act 762 |
| Repealed/replaced | Repealed 1 September 2018 (Act 805) | Current | Laws of Malaysia, Act 805 |
The GST Act 2014 (Act 762) came into force on 1 April 2015, per the Laws of Malaysia record for Act 762. The Goods and Services Tax (Repeal) Act 2018 (Act 805) ended GST on 1 September 2018, per the Laws of Malaysia record for Act 805. SST has a narrower base, which is why its scope keeps expanding.
What Are the Sales Tax Rates in Malaysia?
Sales tax is 5% for selected goods and 10% for most taxable goods, charged once at manufacture or import. Essential daily goods sit at 0%, and petroleum products carry specific rates. Under the 1 July 2025 revision, the Ministry of Finance (MOF) confirmed 0% on essentials and 5% or 10% on discretionary goods.
| Rate | Applies to | Source |
|---|---|---|
| 0% | Rice, chicken, beef, fish, vegetables, medicine, books | MOF, 1 July 2025 revision |
| 5% | Selected goods (fruit juice, mobile phones, computers, watches) | RMCD Sales Tax rates guide |
| 10% | Most taxable goods; imported low-value goods valued RM500 or less | MOF; RMCD LVG guide |
Imported low-value goods (LVG) of RM500 or less have been taxed at 10% since 1 January 2024, per the MOF release on sales tax for low-value goods. The full rate schedule sits in the RMCD guide on proposed sales tax rates for goods.
What Goods Are Taxable Under Sales Tax in Malaysia?
Taxable goods are goods manufactured in Malaysia or imported, taxed at 5% or 10%. The 2025 revision broadened the taxable list, then walked back selected imported fruits after industry feedback. The table below carries the main taxable categories against the current Sales Tax (Rates of Tax) Order.
| Category | Rate | Source |
|---|---|---|
| Articles of plastic, rubber, leather | 10% | Sales Tax (Rates of Tax) Order |
| Cosmetics and perfume | 10% | Sales Tax (Rates of Tax) Order |
| Furniture; musical instruments; watches | 5%/10% | Sales Tax (Rates of Tax) Order |
| Fruit juice; edible preparations | 5% | Sales Tax (Rates of Tax) Order |
| Milk and dairy products; fats and oils; oil seeds | 5%/10% | Sales Tax (Rates of Tax) Order |
| Prepared vegetables, fruit, nuts, seafood, meat | 10% | Sales Tax (Rates of Tax) Order |
| Bird’s nest and honey; glue; soap, wax, polish | 10% | Sales Tax (Rates of Tax) Order |
| Tobacco and manufactured tobacco substitutes | 10% | Sales Tax (Rates of Tax) Order |
After public feedback, MOF’s 28 June 2025 revision exempted selected imported fruits (apples, oranges, mandarin oranges, dates) from sales tax, per the MOF’s 28 June 2025 revision release.
What goods are exempted from sales tax in Malaysia?
Goods manufactured for export are exempt, along with staple foods, farm inputs, and medicines. The categories below come from the Sales Tax (Goods Exempted From Tax) Order 2018, which RMCD confirms came into force on 1 September 2018.
| Exempt goods | Source |
|---|---|
| Books, magazines, newspapers, journals | Sales Tax (Goods Exempted) Order 2018 |
| Cereals; coffee and tea; spices | Sales Tax (Goods Exempted) Order 2018 |
| Fertilizers; insecticides and disinfectant | Sales Tax (Goods Exempted) Order 2018 |
| Live animals, fish, seafood, eggs; meat and offal | Sales Tax (Goods Exempted) Order 2018 |
| Pharmaceutical products | Sales Tax (Goods Exempted) Order 2018 |
| Wood pulp and waste of paper | Sales Tax (Goods Exempted) Order 2018 |
| Goods manufactured for export | Sales Tax (Goods Exempted) Order 2018 |
Who is exempt from sales tax and how do you apply?
Sales tax exemptions run through three schedules under the Sales Tax (Persons Exempted From Payment of Tax) Order 2018. Schedule A covers government and specified persons. Schedule B covers manufacturers of non-taxable goods. Schedule C covers registered manufacturers of taxable goods. Each provides relief on qualifying inputs.
| Schedule | Who qualifies | Exemption granted | Source |
|---|---|---|---|
| Schedule A | Yang di-Pertuan Agong, state rulers, federal/state government departments, some local authorities, Malaysian Armed Forces, duty-free shops, public higher education institutions, importers of specified goods | Exemption on specified goods | Persons Exempted Order 2018 |
| Schedule B | Manufacturers of non-taxable goods | Raw materials, components, packaging, manufacturing aids | Persons Exempted Order 2018 |
| Schedule C | Registered manufacturers of taxable goods | Raw materials, components, packaging, manufacturing aids | Persons Exempted Order 2018 |
You apply for these exemptions through the exemption module on the MySST portal, submitting the relevant schedule and supporting documents before acquiring the goods.
What Is the Service Tax Rate in Malaysia in 2026?
The standard service tax rate is 8%, in force since 1 March 2024. Four service groups stay at 6%: food and beverage, telecommunications, parking, and logistics. A flat RM25 service tax also applies per principal or supplementary credit or charge card each year.
| Rate | Applies to | Source |
|---|---|---|
| 8% | Standard rate for most taxable services since 1 March 2024 | Service Tax (Rate of Tax) (Amendment) Order 2024, P.U.(A) 64/2024 |
| 6% | Food and beverage, telecommunications, parking, logistics | MOF |
| RM25 flat | Per credit or charge card, per year | Service Tax (Rate of Tax) (Amendment) Order 2025, P.U.(A) 173/2025 |
MOF confirmed the 6% to 8% rise took effect on 1 March 2024 and applies only to discretionary and business-to-business services, per the MOF statement on the service tax increase. The rise was projected to raise about RM3 billion in additional annual revenue.
What Services Are Taxable in Malaysia?
Service tax applies to prescribed services supplied by registered providers once they cross their registration threshold. Most groups are taxed at 8%, with food and beverage and telecommunications at 6%. The table maps the main taxable groups to their rate and registration threshold.
| Taxable service group | Rate | Registration threshold | Source |
|---|---|---|---|
| Accommodation (hotels) | 8% | RM500,000 | Service Tax Regulations 2018 |
| Food and beverage (restaurants, cafes) | 6% | RM1.5 million | Service Tax Regulations 2018 |
| Nightclubs, wellness centres, massage | 8% | RM500,000 | Service Tax Regulations 2018 |
| Professional services (legal, accounting, engineering, IT, consultancy, management, employment) | 8% | RM500,000 | Service Tax Regulations 2018 |
| Private clubs; golf clubs; casinos and gaming | 8% | RM500,000 | Service Tax Regulations 2018 |
| Advertising, brokerage, cleaning, courier (30kg or less) | 8% | RM500,000 | Service Tax Regulations 2018 |
| Hire cars; local air travel; customs clearance; vehicle repair | 8% | RM500,000 | Service Tax Regulations 2018 |
| Insurance (non-life and non-medical); subscription broadcasting; theme parks | 8% | RM500,000 | Service Tax Regulations 2018 |
| Telecommunications | 6% | RM500,000 | Service Tax Regulations 2018 |
| Credit and charge card services | RM25 per card | On issuance | Service Tax Act 2018 |
| Digital services (foreign providers) | 8% | RM500,000 | RMCD SToDS guide |
The Service Tax (Amendment) Regulations 2024 also added karaoke centre services, maintenance and repair services, and brokering and underwriting services to the taxable list, per the MySST regulations page.
What Changed in the July 2025 Service Tax Expansion?
From 1 July 2025, RMCD added leasing and rental, construction, fee-based financial services, private healthcare for non-citizens, and private education for international students to the taxable net. Proposed beauty services were dropped entirely after public feedback. The grace period ended on 31 December 2025, and full enforcement applies from 1 January 2026.
| New taxable category | Rate | Registration threshold | Source |
|---|---|---|---|
| Leasing and rental | 8% | RM1 million | MOF, 28 June 2025 revision |
| Fee-based financial services | 8% | RM1 million | MOF, 28 June 2025 revision |
| Construction | 6% | RM1.5 million | P.U.(A) 173/2025 |
| Private healthcare (non-citizens) | 6% | RM1.5 million | P.U.(A) 173/2025 |
| Private education (international students) | 6% | per gazette | P.U.(A) 173/2025 |
| Beauty services (manicure, facial, barber, hairdressing) | Dropped | Not taxable | MOF, 28 June 2025 revision |
The revision took effect on 1 July 2025 following Budget 2025, per the MOF release on the targeted revision. The MOF also raised the leasing and financial-services threshold from RM500,000 to RM1 million after industry feedback.
Do Foreign Digital Service Providers Pay Service Tax in Malaysia?
Yes. Malaysia has charged Service Tax on Digital Services (SToDS) since 1 January 2020, now at 8%, on foreign providers selling to Malaysian consumers. Once annual digital-service turnover to Malaysia exceeds RM500,000, the provider registers as a Foreign Registered Person (FRP) via MySST and files quarterly DST-02 returns.
Covered services include Software as a Service (SaaS), streaming, online advertising, cloud, gaming, e-books, and online marketplaces. Business-to-business relief reduces double taxation where a local business already accounts for the imported service. This corrects the older view that foreign companies need not register. If you sell into Malaysia, Commenda’s global indirect tax software tracks your SToDS registration threshold and filing calendar.
Who Must Register for SST and What Is the Threshold?
The general threshold is RM500,000 in taxable turnover over 12 months, measured on a historical or prospective basis. Food and beverage and several 2025 categories carry higher thresholds. The table below sets out the current thresholds by category.
| Category | Threshold | Source |
|---|---|---|
| Sales tax (manufacturers) | RM500,000 | Sales Tax Act 2018 |
| Service tax (most groups) | RM500,000 | Service Tax Regulations 2018 |
| Food and beverage | RM1.5 million | RMCD |
| Construction; private healthcare; education | RM1.5 million | P.U.(A) 173/2025 |
| Leasing and rental; fee-based financial | RM1 million | MOF, 28 June 2025 |
| Digital services (foreign) | RM500,000 | RMCD SToDS guide |
| Imported low-value goods (online sellers) | RM500,000 | MOF |
The 12-month test looks at taxable turnover in the past 12 months or the expected next 12 months. Cross the line either way, and registration is mandatory.
How Do You Register for SST in Malaysia?
You register online through the MySST portal. Create an account, submit the application with your SSM (Companies Commission of Malaysia) and MyCoID (My Company ID) company details, receive your SST registration number, and start charging tax from the effective date. RMCD may auto-register businesses it identifies from existing records.
Apply by the last day of the month after the month you cross the threshold. If your taxable sales exceed the threshold on 31 May, your registration deadline is 30 June. Your SST registration number follows a fixed format that counterparties can confirm through the MySST registration status lookup.
How Do You File and Pay SST Returns in Malaysia?
The taxable period is bi-monthly, every two months. File the SST-02 return through MySST by the last day of the month following the period end, and pay at the same time via FPX (Financial Process Exchange). Nil returns are still required when no tax is due.
For a January to February period, your return and payment are due by 31 March. Non-registrants accounting for imported taxable services file the SST-02A return. Keep your tax invoices, customs documents, exemption evidence, and return workpapers for the statutory retention period to support any audit.
What Are the Penalties for Late or Missed SST Filing?
Penalties escalate from fines to imprisonment for serious cases. The 2025 grace period is over, so 2026 enforcement is real. The table sets out the penalties under the Sales Tax Act 2018 and Service Tax Act 2018.
| Offence | Penalty | Source |
|---|---|---|
| Failure to file | Fine up to RM50,000, up to 3 years imprisonment, or both | Sales Tax Act 2018 / Service Tax Act 2018 |
| Failure to remit collected tax | Fine up to RM50,000, up to 3 years imprisonment, or both | Sales Tax Act 2018 / Service Tax Act 2018 |
| Late payment | 10% for first 30 days, +15% next 30, +15% next 30 | RMCD |
| Evasion (first offence) | Fine 10 to 20 times the tax, imprisonment up to 5 years, or both | Sales Tax Act 2018 / Service Tax Act 2018 |
| Evasion (second offence) | Fine 20 to 40 times the tax, imprisonment up to 7 years, or both | Sales Tax Act 2018 / Service Tax Act 2018 |
When Does E-Invoicing Become Mandatory for SST Businesses?
Malaysia’s e-invoicing mandate reaches businesses with turnover up to RM5 million on 1 January 2026. The Inland Revenue Board of Malaysia (IRBM), known as LHDN, runs it through the MyInvois system, separate from RMCD and SST. Your SST invoices must comply with MyInvois once your band is live.
| Phase | Turnover band | Mandatory date | Source |
|---|---|---|---|
| 1 | Above RM100 million | 1 August 2024 | IRBM e-Invoice guideline |
| 2 | RM25m to RM100m | 1 January 2025 | IRBM e-Invoice guideline |
| 3 | RM5m to RM25m | 1 July 2025 | IRBM e-Invoice guideline |
| 4 | RM1m to RM5m | 1 January 2026 | IRBM e-Invoice guideline |
| 5 | Up to RM1m (above RM500k) | 1 July 2026 | IRBM e-Invoice guideline |
Businesses below RM500,000 in annual turnover are currently exempt. Full details sit in the IRBM e-Invoice guideline.
How Commenda Helps With Malaysia SST Compliance
SST is operationally unforgiving across entities, service lines, and systems. Commenda’s global indirect tax software maps your SST exposure across goods, services, digital, and imported taxable services, tracks each registration threshold, and confirms every filing deadline is met. You get certainty that your Malaysia obligations are handled.
Pair it with Commenda’s compliance calendar to track SST-02 deadlines by entity, and global tax ID verification to confirm counterparties are properly registered. Book a demo to get a free assessment of your Malaysia SST exposure.
