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Sales and Service Tax (SST)

Rising Global Consultants

Sales and Service Tax (SST)

The Malaysian government abolished the Goods and Services Tax (GST) and implemented the new Sales and Service Tax (SST). According to the Service Tax Act 2018, effective from September 1, 2018, service tax is a consumption tax imposed on taxable services, with a rate of 6%

Service tax is a single-layer tax system, collected by the service provider once, without input or exemption mechanisms. On the other hand, the new sales tax rates are 0%, 5%, or 10%

Increase in service tax rate

Starting March 1, 2024, the service tax rate for all taxable services, except for dining services, telecommunications services, parking services, and logistics services (newly taxable services), will be increased from 6% to 8%.

Differences between sales tax and service tax

 

Sales tax

Service tax

Exchange rate

Exempt, 5% or 10% (see here）

6%

Applicable to

  • Taxable goods manufactured in Malaysia and subject to tax at the point of sale or disposal
  • Taxable goods imported into Malaysia
  • Taxable services provided by businesses registered in Malaysia

Not Applicable to

  • Goods listed under the proposed Sales Tax Order (Exempt Sales Tax Goods)
  • Specific manufacturing activities exempted by the Minister of Finance through the proposed Sales Tax Order (Exemption from Registration)
  • Imported services

Who and when need to register?

Manufacturers of taxable goods

  • If the sales of manufacturers and contractors in the past 12 months reach RM500,000

Note: Some companies are required to register, while others may choose to register voluntarily.

  • If the total value of taxable services provided within 12 months exceeds the threshold, registration is mandatory

Dining services – RM1.5 million

Credit cards, freight forwarding – No threshold

Other services – RM500,000

When to pay?

Accrual basis

  • When goods are sold, disposed of, or first used

Cash basis

  • When paying for taxable services

Payment

Every two months 1 time

Every two months 1 time

Even if your business is exempt from sales tax under the “2018 Sales Tax Proposed (Exempt Sales Tax Persons) Directive,” you still need to apply for the exemption through the MySST website.

Sales and Service

Under the reintroduced Sales and Service Tax (SST) regulations, businesses with an annual turnover exceeding RM500,000 must register for SST. Both GST registrants and non-GST registrants must register for SST online through the MySST system. GST registrants will have their SST registration applications automatically approved within 24 hours, although additional time may be required if verification is needed. Businesses that are not required to register for SST or have not met the minimum turnover threshold can choose to register voluntarily. Under the new tax system, existing GST registrants do not need to apply for deregistration but must submit their final GST return within 120 days after the repeal of the Goods and Services Tax Act.

Sales and Service Tax information and services

All Sales and Service Tax (SST) registrants must submit an SST-01 tax return every two months. To avoid penalties, the tax return must be submitted by the last day of the month following the end of the tax period. Returns can be submitted online or mailed to the Sales and Service Tax Processing Center.

The 2018 Sales Tax Act imposes higher fines and stricter penalties for offenders. Those convicted of tax evasion or assisting others in evasion may face fines of 10 to 20 times the tax amount, imprisonment for up to 5 years, or both. Repeat offenders may be fined no less than 20 times but not more than 40 times the tax amount, imprisoned for up to 7 years, or both.

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