SST in Malaysia: sales tax and service tax basics for SMEs
Sales tax and service tax work very differently. Here is which one applies to your business, the current rates and thresholds after the 2025 and 2026 changes, and how filing works.
Malaysia's SST has two separate taxes. Sales tax (cukai jualan) is charged by manufacturers and importers at 5% or 10% on taxable goods. Service tax (cukai perkhidmatan) is charged by providers of listed services, generally at 8%, or 6% for services such as F&B, logistics and rental. Most businesses register once taxable turnover exceeds RM500,000 a year.
"Do I need to charge SST?" is one of the first tax questions a growing Malaysian business asks, and the answer depends on what you sell. SST is administered by the Royal Malaysian Customs Department (RMCD, or Kastam), not LHDN, and the scope widened on 1 July 2025, with further changes in 2026. This guide covers the basics as of October 2026.
What is SST in Malaysia?
SST is two separate taxes that replaced GST in 2018: sales tax under the Sales Tax Act 2018 and service tax under the Service Tax Act 2018. Each has its own registration, rates and rules.
- Sales tax (cukai jualan) is a single-stage tax on taxable goods made in Malaysia by a registered manufacturer, and on taxable goods imported into Malaysia.
- Service tax (cukai perkhidmatan) is charged on specific taxable services listed in the law, when provided by a registered person.
Unlike GST, SST is not charged at every step of the supply chain. A retailer reselling goods doesn't charge sales tax on them, and a business only charges service tax if its service is on the prescribed list.
What is the SST rate in Malaysia in 2026?
Sales tax is 5% or 10% depending on the goods, and service tax is 8% for most taxable services or 6% for a set of listed services. Some goods are exempt or charged at specific rates.
| Tax | Rate | Applies to |
|---|---|---|
| Sales tax | 10% | Taxable goods not listed elsewhere (the default rate) |
| Sales tax | 5% | Goods listed in the Sales Tax (Rate of Sales Tax) Order 2025 |
| Sales tax | Specific rates | Certain goods, as set out in the orders |
| Service tax | 8% | Most taxable services |
| Service tax | 6% | Food and beverage, telecommunications, parking, logistics, and services such as construction, private healthcare and private education added on 1 July 2025 |
| Service tax | 6% | Rental or leasing services, from 1 January 2026 |
Essential goods such as basic foodstuffs remain exempt from sales tax. Which goods fall into which rate is set by the Sales Tax (Rate of Sales Tax) Order 2025 and the goods exemption order, both of which have been amended since. Check the current lists on MySST rather than relying on an older summary.
Rental or leasing services became taxable on 1 July 2025 at 8%. The Service Tax (Rate of Tax) (Amendment) Order 2026, P.U. (A) 125/2026, moved them to the 6% rate with effect from 1 January 2026.
Who needs to register for SST in Malaysia?
You must register when your taxable turnover goes over the threshold for your activity in any 12-month period. For sales tax and most services, the threshold is RM500,000.
| Activity | Registration threshold (12 months) |
|---|---|
| Manufacturing taxable goods (sales tax) | RM500,000 |
| Most taxable services, including professional services | RM500,000 |
| Food and beverage | RM1,500,000 |
| Construction, private healthcare, private education (added 1 July 2025) | RM1,500,000 |
| Rental or leasing; financial services (added 1 July 2025) | RM1,000,000 |
| Credit card and charge card services | No threshold |
Turnover is measured two ways, and you must register if either crosses the threshold:
- Historical method: the current month plus the previous 11 months.
- Future method: the current month plus the next 11 months, based on what you reasonably expect.
The future method matters for new and fast-growing businesses. If you sign a large contract that will take you over RM500,000 within 12 months, you are liable to register now, not after you cross the line. Registration is done online through the MySST portal. Businesses below the threshold can apply to register voluntarily.
Examples: does my business charge SST?
A Klang Valley IT consultancy bills RM45,000 a month to corporate clients, about RM540,000 over 12 months. IT services are a taxable service with a RM500,000 threshold, so it must register and charge service tax at 8%.
A Penang café takes about RM100,000 a month, or RM1.2 million a year. Food and beverage has a RM1.5 million threshold, so it isn't required to register yet. If a second outlet takes the business over RM1.5 million, it must register and charge 6%.
A Klang Valley trading company buys finished goods from registered manufacturers and resells them to shops. It is not a manufacturer, so it does not charge sales tax on its resales. The sales tax was charged further up the chain. If it also imports goods, sales tax is generally paid to Customs at import.
How often do I file SST returns (SST-02)?
Registered businesses file an SST-02 return every two months, which is the standard taxable period, through MySST. The return and any tax payable are due by the last day of the month following the end of the taxable period.
For a January–February taxable period, the return and payment are due by 31 March. You must file a return for every period, even if there is no tax to pay.
What are the penalties for late SST payment?
Late payment attracts a penalty that grows the longer the tax stays unpaid:
| Period after due date | Penalty |
|---|---|
| First 30 days | 10% of the unpaid tax |
| Second 30 days | Additional 15% |
| Third 30 days | Additional 15% |
| Maximum | 40% |
Separate offences cover failing to keep records and making an incorrect return. RMCD lists fines of up to RM50,000 or imprisonment of up to three years for these.
Can I claim back SST I pay on my purchases?
Generally, no. SST has no general input tax credit system the way GST did, so SST you pay on business purchases is normally a cost. There are specific reliefs, such as sales tax exemptions for registered manufacturers on certain raw materials, and some service tax reliefs between registered businesses, but these have conditions and need to be checked against the current orders and guides.
How do SST and e-invoicing fit together?
They are separate obligations with separate thresholds. SST is run by Customs; e-invoicing is run by LHDN. A business can be SST-registered but exempt from e-invoicing, or the other way round.
If you are both, your e-invoices need to show the SST correctly, including your SST registration number and the tax type and amount on each line. Invoicing software that holds your SST setup in one place helps keep these consistent; HumbleBear, for example, checks the SST details before an e-invoice goes to MyInvois. See our guide to LHDN e-invoicing for who must e-invoice.
What records do I need to keep for SST?
Keep invoices, credit and debit notes, import documents and your SST-02 workings for seven years, in Bahasa Malaysia or English, and in Malaysia unless Customs approves otherwise. Electronic records are fine if they can be readily accessed and printed. Our article on record keeping in Malaysia covers the full picture.
Frequently asked questions
Is SST the same as GST?
No. GST was a broad multi-stage tax that was replaced in 2018. SST is two narrower taxes: sales tax on goods made or imported by manufacturers and importers, and service tax on a specific list of services.
What is the service tax rate for F&B in Malaysia?
Food and beverage services are taxed at 6%. The registration threshold for F&B operators is RM1.5 million of taxable services in 12 months, higher than the RM500,000 that applies to most services.
Do I charge SST if my turnover is below RM500,000?
Usually not. Most businesses only have to register, and charge SST, once taxable turnover exceeds RM500,000 in 12 months, or a higher threshold for some services. You cannot charge SST unless you are registered.
Is rental income subject to service tax in Malaysia?
Rental or leasing services became taxable on 1 July 2025, with a registration threshold of RM1 million. The rate was reduced from 8% to 6% with effect from 1 January 2026. Some rentals are excluded or exempt, so check RMCD's current guide and service tax policy on rental or leasing services for your situation.
When is the SST-02 return due?
By the last day of the month after the end of each two-month taxable period. Payment is due at the same time, and late payment penalties start at 10%.
Sources
- RMCD MySST: Registering business (thresholds and turnover methods)
- RMCD MySST: FAQ on the expansion of service tax scope 2025
- RMCD MySST: FAQ on sales tax rate changes 2025
- RMCD MySST: FAQ on service tax
- RMCD MySST: SST orders
- RMCD MySST: Background (rates including rental or leasing at 6% from 1 January 2026)
- Federal Gazette: Service Tax (Rate of Tax) (Amendment) Order 2026, P.U. (A) 125/2026
- MOF: Revision to the expanded sales tax and service tax (28 June 2025)
- RMCD MySST: Filing tax returns
- RMCD MySST: Penalties
