What is SST in Malaysia: Meaning, Exemption List, Rate 2025 and Calculation

The Sales and Service Tax (SST) is Malaysia’s principal indirect tax on the sale and consumption of goods and services. SST, which replaced the Goods and Services Tax (GST) in 2018, operates as a single-stage tax, meaning it is charged only once, either at the manufacturing/importation stage (for goods) or at the point of service (for services).

Consumers ultimately bear the cost of SST, while businesses collect and remit the tax to the Royal Malaysian Customs Department (RMCD). Malaysia’s SST rates range from 5% or 10% for sales tax and 6% or 8% for service tax, depending on the type of goods or services. 

In general, businesses must register for SST if their annual turnover exceeds RM500,000 for most goods and services.

Recent Changes to Malaysia SST Rates & Scope Expansion

The government is expanding the Sales and Service Tax (SST) scope starting July 1, 2025, to increase revenue and strengthen Malaysia’s fiscal position. 

• Over 4,800 previously zero-rated or exempted goods are now taxed at 5%, including luxury food items, imported fruits, essential oils, silk, and a wide range of industrial machinery. 
• All other taxable goods not on the exemption or special schedules will continue to be taxed at the standard 10% rate, covering most general and luxury items. 
• The Service Tax scope now includes more service categories: leasing, rental, logistics, financial, private healthcare (for non-Malaysians), and private education (for non-Malaysians). 
• Service tax rates are set at 6% for key sectors and 8% for most others, with updated thresholds and exemptions for small businesses and B2B transactions. 
• There is a penalty-free compliance grace period until December 31, 2025.

What is Sales and Service Tax?

SST, or Sales and Service Tax, is the major consumption tax that is charged on the sale of goods and services.  

• Since SST is a consumption tax in Malaysia, tax burden is ultimately borne by consumers. This means that businesses are responsible for collecting the tax from consumers as part of the purchase price and remitting it to the government. 
• SST comprises two separate taxes: Sales Tax and Service Tax. Sales Tax is applicable to taxable goods either manufactured in or imported into Malaysia, while Service Tax is levied on specific services provided by businesses in Malaysia. 
• SST is applied at a single stage, either during the manufacturing process or at the point of consumption of goods and services.
• Sales and Services Tax in Malaysia was officially reintroduced on 1 September 2018, replacing the former Goods and Services Tax (GST) system.

Click here to know the difference between GST and SST in Malaysia

Who pays SST in Malaysia?

In Malaysia, the Sales and Services Tax (SST) is  paid by consumers when they purchase goods or services that are subject to the tax. However, businesses are responsible for collecting and remitting the SST to the government.

What are the different types of Malaysia SST rates?

The SST regime features a multi-tier rate structure, aligned with the nature and necessity of goods and services: 

• Sales Tax at 5%: Select items, including construction materials, some foodstuffs, petroleum oils, and (from July 2025) additional imported goods like certain fruits and premium seafood, now subject to 5% after the latest update. 
• Sales Tax at 10%: The standard rate for most taxable goods and imports. Luxury and non-essential items, such as high-end bicycles, essential oils, and antique artworks, may fall into this category, especially with the 2025 changes. 
• Service Tax at 8%: Effective from March 2024, the rate applies to most services, excluding food & beverage, telecommunication, parking, and logistics services. 
• Service Tax at 6%: For food & beverage, telecommunication, parking, logistics, and (from July 2025) specific new categories like construction and private healthcare (for foreigners) and private education (for international students). 
• Zero-rated and Exempted Goods: Essential goods such as rice, chicken, beef, vegetables, eggs, local fish, books, medicines, and basic building materials remain exempt or zero-rated, ensuring affordability for the public.

Malaysia SST Exemptions List

Malaysia’s SST framework continues to protect essential items through exemptions & zero-rating and the following is the list of goods exempted from SST:

• Food staples: rice, chicken, beef, vegetables, eggs
• Local fish species (e.g., selar, tongkol, cencaru, sardines)
• Books, educational materials, medicines
• Pharmaceuticals, basic building materials, and school supplies
• Goods manufactured for export purposes 

From 1st July 2025: Select imported fruits (apples, oranges, mandarin oranges, and dates) have been added to the exempt list following public feedback.

Sales and Service Tax (SST) Registration in Malaysia

It's important to note that the registration for sales tax and service tax are separate, each with its own submission process. Here are the simplified steps for SST registration in Malaysia:

• Visit the MySST portal, the government website dedicated to SST registration, at www.mysst.customs.gov.my.
• Fill out the recommended registration form with accurate information as requested.
• Upon submission, you will receive an approval letter immediately, confirming the successful completion of the registration process.
• Additionally, you will be assigned a sales tax registration number.
• The system will provide details such as the effective date of registration, as well as the rules and responsibilities that you need to acknowledge.
• The approval confirmation letter will be automatically sent to your registered email address for future reference.

Which businesses must apply for sales and service tax registration in Malaysia?

Businesses involved in offering taxable goods and services are required to register for Sales and Services Tax in Malaysia, provided they fulfil certain criteria outlined below:

For Sales Tax Registration

• Engaged in the manufacture of taxable goods.
• The total sales value over the preceding 12 months surpasses RM 500,000.

For Service Tax Registration

• Provide prescribed taxable services.
• Total taxable service value exceeds RM500,000 in the past 12 months (increased to RM1 million for some services from July 2025; e.g., rental/leasing and financial services).
• New categories and thresholds introduced in July 2025: construction and private healthcare (RM1.5 million), private education (RM60,000 per student/year).

Registration deadlines are tied to when your business surpasses the threshold. Updated deadlines apply to new categories under the 2025 rules, including a grace period until December 31, 2025, for businesses to comply without penalty.

Suggested Read: SST Calculator: Calculate Sales & Service Tax in Malaysia

Penalties of SST Dues

Here are the possible penalties tied to Sales and Service Tax (SST) offences in Malaysia:

Non-Submission of SST Returns:

Failing to file SST returns can result in severe penalties for the taxable entity. The penalties include:

• A fine of up to RM50,000,
• A prison term of up to three years,
• Or both the fine and imprisonment.

Non-Payment of SST Dues:

Failure to make the requisite SST payments also carries hefty penalties which encompass:

• A fine amounting to RM50,000,
• Imprisonment for up to three years,
• Or both.

Late Payment Penalties:

Below is a tabulation of the penalty rates charged for varying durations of late payments:

Note: A penalty-free grace period is in effect until December 31, 2025, for businesses genuinely making efforts to comply with the new rules.

Conclusion

Malaysia’s Sales and Service Tax (SST) is the main indirect tax on goods and services, collected at a single stage by businesses and paid by consumers. As of July 2025, SST has been expanded to cover more goods and services, with new rates and categories introduced, including some luxury and non-essential items now taxed at higher rates. Essential goods and certain imported fruits remain exempt, and a penalty-free grace period is in place until the end of 2025 for businesses adjusting to the new rules. These updates are aimed at boosting government revenue while protecting basic needs and supporting small businesses.

Government Resources & Links

• Official MySST Portal and Registration
• Sales Tax FAQ (CP 2025)
• Service Tax FAQ (CJ 2025)
• SST Orders & Regulations
• MIDA Guide to Sales Tax
• Royal Malaysian Customs Department SST Policy
• SST Helpline: 1-300-888-500