Guide to Imported Services for Service Tax

Determine import duty steps

Determine the product code: The code classifies the product and determines its corresponding import duty rate
Calculate CIF value: This is the total cost of the goods, including the purchase price, insurance, and freight
Determine the import duty rate: Use the code to find the applicable proportional or specific import duty rate
Calculate import duty: To determine the amount of import duty, multiply the CIF value by the percentage of the import duty rate. Import duty = CIF value × Import duty rate
Calculate Sales and Service Tax (SST): In addition to import duty, you also need to calculate SST. For most items over 500 MYR, the tax rate is 10%, for essentials it’s 5%, and some products have specific rates. SST = CIF value × SST rate
Total Duty: Total duty is the sum of import duty and SST. Total Duty = Import Duty + SST
Special Cases for Low-Value Goods (LVG): For LVG imported from April 1, 2023, onwards, a fixed SST rate of 10% applies for items exceeding 500 MYR. For LVG with invoices issued before April 1, 2023, SST does not apply regardless of the delivery date

By following these steps, you can accurately determine the import duties and applicable taxes for importing goods into Malaysia

Sales and Services Tax (SST) registrant

According to Section 26 of the Service Tax Act 2018, SST registrants must complete the SST-02 form to report taxable services imported. The value of imported taxable services should be separately declared in Section B1 of the SST-02 form.

The SST-02 form must be submitted, and payment should be made before the last day of the month following the end of the tax period.

Non-SST registrant

According to Section 26A of the Service Tax Act 2018, non-SST registrants need to use the SST-02A form to report taxable services imported.

They must submit the SST-02A form, and the payment deadline must be no later than the last day of the month following the end of the month in which the service was paid for or the invoice was received.

Late payment penalty

Number of days late	Penalty rate
First 30 Days	10%
Next 30 Days	15%
30 Days Thereafter	15%

Responsibilities of non-SST registrants

According to Section 24(5A) of the Service Tax Act 2018, non-SST registrants conducting business who receive imported taxable services must record all related transactions. All records should be kept for seven (7) years, stored in Malaysia, and recorded in Malay or English.

Exempt from Service Tax

1.Imported taxable services involving：

Goods or land located outside Malaysia
Matters outside Malaysia

2.Group relief – Group relief applies to imported taxable services obtained under Group G – Professional Services, First Schedule of the Service Tax Act 2018 (excluding employment services and private agencies). If a company receives the aforementioned taxable services from a company within the same group located outside Malaysia, such services will not be considered as imported taxable services (no service tax is required).

3. B2B service tax exemption – From January 1, 2019, certain taxable services are exempt, including professional services (excluding employment services and private agencies) and advertising services provided by a registrant to another registrant registered for the same services. The tax-exempt conditions applicable to service recipients are as follows:

The recipient of the taxable service and the provider of the taxable service are registered within the same taxable group; and
The obtained service must be of the same category as the taxable services provided by the recipient to their clients

From January 1, 2020, the B2B exemption is also extended to：

I. Digital services obtained by SST registrants from foreign registrants; and

II. Information technology (IT) services and advertising services obtained by SST registrants from any entity outside Malaysia. The exempt taxable services must be of the same type as the IT and advertising services provided by the registrant.

To qualify for the B2B exemption, the following conditions must be met:

Imported services are for business development purposes and not for personal consumption
The payment for the imported services has been made to the service provider; and
The imported services are obtained after January 1, 2020

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