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Malaysia SST explained for foreign businesses

Malaysia SST is the country's two part tax on goods and services, run by the Royal Malaysian Customs Department. It has a sales tax on goods and a service tax on listed services. It replaced GST on 1 September 2018. If you sell into Malaysia or run a business there, you need to know which part touches you.

Sources: Royal Malaysian Customs Department, MySST portal, "Understanding SST" and "Background" pages.

What SST is, in plain words

SST is not one tax. It is two separate taxes with different rules.

  • Sales tax applies to taxable goods made in Malaysia and to taxable goods brought in from abroad. It is a single stage tax. It is charged once, when goods are imported or when a manufacturer sells them.
  • Service tax applies to taxable services provided in Malaysia in the course of business. It also applies to some imported services.

Both taxes use a two month filing period. Tax on a service falls due when payment is received.

Sources: Royal Malaysian Customs Department, MySST portal, "Understanding SST."

How it differs from VAT or GST

VAT and GST are charged at every step of the supply chain. Each business collects tax and claims back the tax it paid on its own costs. That is why those systems rely on input credits.

SST works differently. Sales tax is charged at one point, so there is no chain of credits for goods. Service tax is charged on the listed service itself. If you are used to a VAT system, expect fewer refunds and less paperwork on credits, but also more attention to whether your product or service is on the taxable list.

Sources: Royal Malaysian Customs Department, MySST portal, "Understanding SST" (single stage description of sales tax). The comparison with VAT and GST is the editors' general explanation.

Current rates

Service tax was 6 percent from 1 September 2018 to 29 February 2024. On 1 March 2024 it rose to 8 percent for most services. Food and beverage, parking, logistics and telecommunications services stayed at 6 percent. Foreign providers of digital services are also on the 8 percent rate after the 2024 change.

For sales tax, goods listed in the 2025 rate order carry 5 percent or a specific rate. Goods in neither the rate order nor the exemption order default to 10 percent. A change to sales tax rules took effect on 1 July 2025, and some goods that were once exempt became taxable.

Sources: Royal Malaysian Customs Department, MySST portal, "Background" page; "Transition of Sales Tax Rate Changes 2025" FAQ; Digital services portal (mystods.customs.gov.my).

Who must register

You register when your taxable sales pass a set threshold over 12 months. For manufacturers of taxable goods, that threshold is RM500,000. For service providers, the threshold depends on the type of service. Many groups, such as accommodation and professional services, use RM500,000, while food and beverage uses RM1,500,000. Some services have no threshold.

Businesses under the threshold can often apply to register on a voluntary basis. Registration is online through the Customs portal. A foreign company that sells taxable digital services to Malaysian customers has its own route through the digital services portal.

Sources: Royal Malaysian Customs Department, MySST portal, "Registering Business" page.

The 1 July 2025 expansion

On 1 July 2025, the service tax base grew. New taxable services include rental or leasing, construction, financial services, private healthcare and private education. Each has its own rate and registration threshold, so check the official guide for your line of work before you assume you are in or out. General information only, not medical advice. A clinic or private provider should check its own position in the official guide.

For a foreign firm, the practical point is simple. If you lease equipment to a Malaysian customer, build in Malaysia, or sell financial services there, your position may have changed.

Sources: Royal Malaysian Customs Department, MySST portal home page and "Expansion of Service Tax Scope 2025" FAQ.

A simple checklist

  • Decide whether you sell goods, services or both in Malaysia.
  • Check if your item is on the taxable list.
  • Add up your taxable sales over the last 12 months.
  • Compare the total with the threshold for your group.
  • If you pass it, register online and set up two month returns.

Customs runs a call centre at 1-300-888-500 on weekdays. When in doubt, ask them before you invoice.

Sources: Royal Malaysian Customs Department, MySST portal, "Registering Business" page (call centre details).

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