Sales and Service Tax (SST) is Malaysia’s indirect tax system, reintroduced on 1 September 2018 to replace the Goods and Services Tax (GST). It has two separate parts: sales tax on goods and service tax on prescribed services. Since then the system has changed in two big ways that many older guides still get wrong — the standard service tax rate rose from 6% to 8% on 1 March 2024, and a major scope expansion took effect on 1 July 2025, pulling rental, construction, financial services, private healthcare and more into the net. This guide reflects those changes and explains what SST actually costs your business in 2026.
- SST in Malaysia at a Glance (2026)
- Sales Tax vs. Service Tax
- What Is Sales Tax?
- Sales Tax Rates in Malaysia
- Goods Subject to Sales Tax
- Goods Exempt From Sales Tax
- What Is Service Tax?
- Service Tax Rate: 8% (with 6% exceptions)
- Who Needs to Charge Service Tax?
- The 2025 SST Expansion: What Changed
- SST Taxable Services List: What’s Included?
- Services That Remain Exempt
- Registration Requirements for SST
- Who Needs to Register?
- How to Register for SST
- Consequences of Non-Compliance
- Do You Need to Register? A Quick Decision Framework
- SST vs. GST: What’s the Difference?
- How to Calculate SST for Your Business
- Filing and Paying SST in Malaysia
- Exemptions and Refunds Under SST
- Goods and Services Exempt From SST
- SST Refund Process
- SST and E-Invoicing: How They Connect
- Conclusion: Staying Compliant With SST in Malaysia
- Frequently Asked Questions (FAQs)
Rates and thresholds below were verified in August 2026 against the Royal Malaysian Customs Department (RMCD) and Ministry of Finance announcements. SST rules are updated frequently — always confirm your specific position with RMCD or a licensed tax agent before filing.
SST in Malaysia at a Glance (2026)
| SST component | Current rate | Applies to | Registration threshold (12 months) |
|---|---|---|---|
| Sales tax | 5% or 10% (0% / exempt for essentials) | Goods manufactured in or imported into Malaysia | RM500,000 |
| Service tax — standard | 8% | Most prescribed taxable services | RM500,000 |
| Service tax — reduced | 6% | F&B, telecommunications, parking, logistics, construction, private healthcare, education | RM500,000 (RM1.5m for F&B operators) |
Both taxes are single-stage — charged once, with no input-tax credit to claim back (unlike GST). That single design choice drives most of the planning decisions later in this guide.
Sales Tax vs. Service Tax
Sales tax and service tax are distinct components of SST. Sales tax is levied on goods at the point of manufacture or import, while service tax is imposed on specific services provided by registered businesses. A single company can be liable for both — for example, a manufacturer that also rents out equipment. Knowing which tax applies to each revenue stream is what determines your pricing, your registration obligations and your compliance calendar.
What Is Sales Tax?
Sales tax is a single-stage tax applied to taxable goods manufactured in Malaysia or imported into the country. It is charged once — at the point of manufacture (when the goods are sold, used or disposed of) or at the point of import (when goods are released from Customs control).
Sales Tax Rates in Malaysia
Sales tax is charged at 5% or 10% depending on the goods, with a large list of essentials at 0% (exempt). Effective 1 July 2025, the government revised the rates so that several previously untaxed non-essential and premium items — such as imported king crab and salmon, essential oils, premium fabrics, antique artwork and racing bicycles — now attract 5% to 10%. Certain items (for example petroleum products) carry specific rates.
Goods Subject to Sales Tax
Common categories of goods that attract sales tax include:
- Electronics and electrical appliances
- Motor vehicles
- Tobacco products and alcoholic beverages
- Selected non-essential and premium/luxury goods (expanded from 1 July 2025)
Goods Exempt From Sales Tax
To protect the cost of living, daily essentials remain exempt whether locally produced or imported — including rice, chicken, beef, vegetables and eggs, plus local fish varieties such as selar, tongkol, cencaru and sardines. After public feedback in June 2025, the exemption was extended to imported apples, oranges, mandarin oranges and dates. Books, school materials, medicines and key building materials also remain exempt. Agricultural produce grown in Malaysia is not “manufactured” and therefore falls outside sales tax.
What Is Service Tax?
Service tax is a consumption tax charged on prescribed taxable services provided by registered businesses in Malaysia. It also applies to imported taxable services (digital or consulting services bought from overseas providers).
Service Tax Rate: 8% (with 6% exceptions)
This is the single most common mistake in older articles. The standard service tax rate is 8%, not 6% — it was raised on 1 March 2024. A reduced 6% rate is retained for a defined set of services: food and beverage, telecommunications, parking and logistics. From 1 July 2025, the reduced 6% rate was also applied to construction works, private healthcare and education, while new categories such as rental/leasing and fee-based financial services are taxed at 8%.
Who Needs to Charge Service Tax?
A business must register and charge service tax once the total value of its taxable services exceeds the applicable threshold within any 12-month period. The general threshold is RM500,000, but several categories have their own thresholds (see the registration table below). Food and beverage operators, for instance, only register once turnover exceeds RM1.5 million.
The 2025 SST Expansion: What Changed
Announced on 9 June 2025 and refined on 27 June 2025 after industry feedback, the expansion broadened service tax to six new groups. Some proposals (notably beauty and hairdressing services) were dropped before the 1 July 2025 start date. Here is where things landed:
| Newly taxable service (from 1 Jul 2025) | Rate | Registration threshold | Key exclusions / notes |
|---|---|---|---|
| Rental or leasing of tangible assets (Group K) | 8% | RM1,000,000 | Residential housing, reading materials, assets outside Malaysia and financial leases excluded; MSME tenants with turnover under RM1m exempt; B2B relief available |
| Fee/commission-based financial services (Group H) | 8% | RM1,000,000 | Basic banking, and life/medical insurance & takaful for individuals excluded; Labuan B2B relief |
| Construction works | 6% | RM1,500,000 | Residential buildings and their related public facilities excluded (except mixed-development approved by local authority); B2B relief available |
| Private healthcare | 6% | RM1,500,000 | Malaysian citizens exempt — tax applies to non-citizens; medical aids (e.g. wheelchairs) not taxed |
| Education | 6% | No threshold | Private schools charging over RM60,000 per student per year, and services to non-citizens at private higher-education institutions and language centres |
| Beauty & hairdressing (proposed) | — | Dropped | Removed on 27 Jun 2025 — manicure/pedicure, facials, barbers and hairdressers are not taxable |
To ease the transition, RMCD granted a grace period to 31 December 2025 during which no penalties applied for late registration, late filing or documentation errors where a business showed reasonable steps to comply (this relief did not cover deliberate fraud). Non-reviewable contracts signed before the changes can qualify for relief until 30 June 2026.
SST Taxable Services List: What’s Included?
Following the expansion, taxable services span a wide range of industries. Common examples include:
- Hospitality: hotels and accommodation, food and beverage (6%)
- Telecommunications & digital: mobile, internet and prescribed digital services
- Professional services: legal, accounting, consultancy, IT and management (8%)
- Logistics & warehousing: freight forwarding and delivery (6% for logistics)
- Rental & leasing: commercial and equipment leasing (8%)
- Financial services: fee/commission-based banking and brokerage (8%)
- Construction, private healthcare and education (6%, subject to the exclusions above)
Services That Remain Exempt
Certain services stay outside service tax, including public/government healthcare and healthcare for Malaysian citizens, basic banking and individual life/medical insurance, residential rental, and (after the June 2025 revision) beauty and hairdressing services. For the definitive, up-to-date list, check the official MySST portal at mysst.customs.gov.my or consult a tax agent.
Registration Requirements for SST
Who Needs to Register?
You must register once your taxable turnover crosses the relevant threshold in any rolling 12-month period. The thresholds now vary by activity:
| Business activity | Registration threshold (12 months) |
|---|---|
| Manufacturing of taxable goods (sales tax) | RM500,000 |
| General taxable services (service tax) | RM500,000 |
| Food & beverage operators (restaurants, cafes, caterers) | RM1,500,000 |
| Rental or leasing services | RM1,000,000 |
| Fee/commission-based financial services | RM1,000,000 |
| Construction works | RM1,500,000 |
| Private healthcare (non-citizens) | RM1,500,000 |
| Education services | No threshold |
How to Register for SST
Registration is done online through the MySST portal. Prepare your business registration details and financial records, and register promptly once you exceed (or expect to exceed) the threshold. Businesses that became liable under the 2025 expansion were required to register by end-August 2025, with liability starting 1 September 2025.
Consequences of Non-Compliance
Failing to register, charge or remit SST when required can result in penalties, fines and prosecution by RMCD. Beyond the legal risk, unregistered businesses that should have charged tax may have to absorb the tax out of their own margin retrospectively — a costly mistake.
Do You Need to Register? A Quick Decision Framework
Work through these four questions before you assume SST does or doesn’t apply to you:
| Ask yourself | Why it matters | Next step |
|---|---|---|
| 1. Do I supply taxable goods or prescribed taxable services? | Only listed goods and prescribed services are within SST — many activities are outside it entirely. | Match each revenue stream to the MySST prescribed lists. |
| 2. Is my 12-month taxable turnover above the threshold? | Thresholds differ by activity (RM500k, RM1m or RM1.5m). | Track a rolling 12-month total, not just the calendar year. |
| 3. Which rate applies — 8% or 6%? | Pricing and margins depend on charging the correct rate. | Confirm whether your service sits in the reduced-rate list. |
| 4. Can I use B2B or MSME relief? | Exemptions can remove double taxation on rental, construction and financial services. | Check eligibility and keep documentation to support the exemption. |
If you are still setting up, it helps to get the structure right first — see our guides on choosing the right business entity and the business licenses you may need.
SST vs. GST: What’s the Difference?
Malaysia ran GST from 2015 until it was zero-rated in June 2018 and repealed on 1 September 2018, when SST returned. The core differences:
| Feature | SST (current) | GST (abolished 2018) |
|---|---|---|
| Tax structure | Single-stage | Multi-stage |
| Rate | Sales 5–10%; Service 6% or 8% | Uniform 6% |
| Input tax credit | None | Claimable along the supply chain |
| Scope | Selected goods and prescribed services | Nearly all goods and services |
| Status | In force since 1 Sep 2018 | Zero-rated 1 Jun 2018; repealed 1 Sep 2018 |
Because SST has no input-tax credit, tax can “cascade” — a registered business pays SST on its own taxable inputs and cannot claim it back, so the cost may be built into prices down the chain. B2B and group relief exist for some services precisely to limit this. The trade-off is simplicity: fewer businesses are captured and compliance is lighter than under GST.
How to Calculate SST for Your Business
To work out SST:
1. Identify whether the supply is a taxable good (sales tax) or a prescribed service (service tax).
2. Determine the correct rate — 5% or 10% for goods; 6% or 8% for services.
3. Apply the rate to the taxable value (selling price or service charge).
[su_box title=”Examples of SST Calculation (2026 rates)” box_color=”#000877″ title_color=”#ffffff” radius=”6″]
Goods worth RM100,000 subject to 10% sales tax:
Sales tax = RM100,000 × 10% = RM10,000
Consultancy fees of RM50,000 at the standard 8% service tax:
Service tax = RM50,000 × 8% = RM4,000
Restaurant sales of RM50,000 at the reduced 6% F&B rate:
Service tax = RM50,000 × 6% = RM3,000
[/su_box]
Filing and Paying SST in Malaysia
SST is filed on a bi-monthly (two-month) taxable period. The SST-02 return and payment are due by the last day of the month following the end of each taxable period — for example, for the period ending 31 August, the deadline is 30 September. Returns are submitted electronically through the MySST portal, and a return must be filed even if no tax is due for the period. Late payment triggers escalating penalties, so calendar the deadlines. Keeping clean digital records also dovetails with Malaysia’s phased e-invoicing rollout (see below).
Exemptions and Refunds Under SST
Understanding what is exempt and how refunds work is essential for compliance and cash-flow management.
Goods and Services Exempt From SST
Key exemptions include:
- Essential goods: rice, chicken, beef, vegetables, eggs, local fish, medicines, books and educational materials, and selected imported fruits (apples, oranges, mandarin oranges, dates).
- Logistics relief: certain delivery/distribution services in designated or free zones, and ocean freight between Peninsular Malaysia and Sabah/Sarawak/Labuan.
- Residential: rental of housing accommodation and maintenance of residential buildings.
- Exports: goods manufactured for export are not subject to sales tax.
- B2B and MSME relief: available for rental/leasing, construction and financial services to reduce double taxation.
SST Refund Process
If you overpay SST — for example through a calculation error — you can apply to RMCD for a refund. In practice this means: (1) confirm you are eligible (genuine excess payment); (2) complete the prescribed refund application form; (3) attach supporting documents such as proof of payment and tax invoices; (4) submit within the allowed timeframe; and (5) receive the approved refund, typically by bank transfer. Accurate invoicing and record-keeping make refund claims far smoother.
SST and E-Invoicing: How They Connect
Malaysia is rolling out mandatory e-invoicing (MyInvois) in phases based on annual turnover. Under the June 2025 timeline, businesses with turnover of RM5–25 million came on board from 1 July 2025, RM1–5 million from 1 January 2026, and those below RM1 million from 1 July 2026, with businesses under RM500,000 exempt for now. If you are SST-registered, your tax invoices increasingly need to flow through MyInvois — so treat SST compliance and e-invoicing readiness as one project. For broader tax planning, see our guides on the corporate tax rate in Malaysia and smart ways to reduce company income tax.
Conclusion: Staying Compliant With SST in Malaysia
Staying compliant with SST in 2026 comes down to a few essentials: charge the right rate (8% standard service tax, 6% for the reduced-rate services, 5–10% sales tax), watch the correct registration threshold for your activity, file every two months on time, and keep documentation tight enough to support exemptions and refunds. The 2024 rate rise and 2025 expansion mean many businesses that were once outside SST are now inside it — so reassess your position rather than relying on old assumptions.
Because SST is a money matter (YMYL), treat this article as general guidance and get advice tailored to your business before acting.
Read also: Corporate Tax Rate in Malaysia: A Comprehensive Guide | How to Register a Company in Malaysia
Frequently Asked Questions (FAQs)
Disclaimer: This article by KayaToday provides general information about Sales and Service Tax (SST) in Malaysia and was verified in August 2026. Rates, thresholds and rules change frequently — for advice tailored to your business, please consult the Royal Malaysian Customs Department (MySST) or a qualified tax professional before acting.
