Malaysia SST Guide 2026

SST vs VAT — Key Differences

Malaysia replaced its short-lived GST (VAT) in 2018 with the reintroduced SST. The fundamental difference is that SST is a single-stage tax, not a multi-stage VAT:

• No input tax credit: Unlike VAT/GST, SST does not allow businesses to claim credits for tax paid on purchases
• Single-stage: Sales Tax is levied once at the manufacturer/importer level; Services Tax is levied once at the service provider level
• No cascading: Because it is single-stage, there is no cascading effect (the tax is embedded in the price only once)
• Lower compliance burden: Fewer filings (bi-monthly for Sales Tax, twice-yearly for Services Tax for most businesses)
• Smaller tax base: Fewer goods and services are taxed compared to a full VAT system

Sales Tax (Cukai Jualan) — Rates 5% and 10%

Sales Tax is a single-stage tax imposed on manufactured goods and imported goods at the manufacturer or importer level. It is not charged at subsequent stages of distribution.

• Standard rate: 10% on most manufactured goods
• Reduced rate: 5% on certain goods (e.g., certain building materials, selected food products, some household items)
• Zero-rated/exempt: Essential foods (rice, sugar, cooking oil, flour, etc.), agricultural products, livestock, books, newspapers, pharmaceuticals, and medical devices
• Registration threshold: Manufacturers with annual sales turnover exceeding MYR 500,000 must register

Sales Tax is calculated on the selling price at the factory gate (for manufacturers) or the landed cost (for importers). The licensed manufacturer issues a Sales Tax invoice showing the SST registration number.

Services Tax (Cukai Perkhidmatan) — Rate 6% (8% for Selected Since 2024)

Services Tax is imposed on prescribed taxable services provided by registered service providers:

• Standard rate: 6% on most prescribed services
• Increased rate (8% since 2024): Certain services including brokerage, underwriting, and some logistics services
• Registration threshold: Businesses providing taxable services with annual turnover exceeding MYR 1.5 million must register

Taxable services include: restaurants and food delivery, hotels and accommodation, telecommunications, IT services, professional services (legal, accounting, engineering, architecture), management services, advertising, gaming and betting, parking, and private health facilities.

Exempt services: Education, public healthcare, public transport, basic financial services (savings accounts, loans), and certain agricultural services.

Registration and Compliance

Sales Tax registration: Manufacturers must register with the Royal Malaysian Customs Department (RMCD / Kastam) when annual sales turnover exceeds MYR 500,000. Importers are required to register regardless of turnover. Registration is done via the MySST portal.

Services Tax registration: Businesses providing taxable services must register when annual turnover exceeds MYR 1.5 million. Registration is mandatory once the threshold is crossed.

Filing frequency: Sales Tax returns are filed bi-monthly (every two calendar months). Services Tax returns were historically bi-monthly but some businesses may file twice-yearly. Returns and payment are due within 30 days after the end of the taxable period. Filing is done online through the MySST portal.

Penalties: Late filing attracts penalties of 10% for the first 30 days, 15% for 31-60 days, and 20% for 61+ days of the outstanding tax. Late payment penalties are separate and calculated daily at 0.05% per day.

Exemptions and Relief

Certain goods and services are exempt or may qualify for relief from SST:

• Sales Tax exemptions: Essential food items, agricultural inputs, educational materials, medical goods, and goods for export
• Services Tax exemptions: Basic necessities (water supply), public transport, education, healthcare, and religious services
• Tourism tax: A separate Tourism Tax (TTx) of MYR 2-20 per room per night applies to accommodation providers, on top of Services Tax
• Sales Tax relief for manufacturers: Manufacturers may apply for exemption on raw materials, machinery, and equipment used directly in manufacturing (subject to conditions and approval)

E-Commerce and Digital Services

Since 2020, foreign digital service providers with annual revenue from Malaysian consumers exceeding MYR 500,000 must register for Services Tax and charge 6% on digital services (app stores, streaming, cloud services, software). The tax is collected from consumers. Non-compliance can result in service blocking by the Malaysian Communications and Multimedia Commission (MCMC).

Domestic e-commerce platforms facilitating transactions are generally subject to Services Tax on commission or service fees charged to sellers. The underlying goods sold by third-party sellers on platforms are subject to Sales Tax at the manufacturer/importer level as usual.

FAQs

Does Malaysia have VAT?

No. Malaysia had a GST (VAT) from 2015 to 2018 at 6%, which was abolished and replaced with the SST system. As of 2026, there are no plans to reintroduce VAT/GST.

Can I claim input tax credit on SST?

No. SST is a single-stage tax with no input tax credit mechanism. Businesses cannot deduct SST paid on purchases against SST collected on sales. This is the fundamental difference between SST and VAT.

Are exports subject to Sales Tax?

No. Exported goods are exempt from Sales Tax. Manufacturers must keep documentation proving goods were exported.

What is the penalty for late SST registration?

Failure to register when required can result in a penalty of up to 15% of the tax due for the period of non-registration, plus a further penalty of up to 15% for incorrect returns.

Disclaimer

This guide provides general information about Malaysian SST for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified tax advisor or the Royal Malaysian Customs Department (Kastam) directly for advice specific to your situation. InvestmentKit does not provide tax advice.