SST Malaysia — Sales Tax 5/10% and Service Tax 8%
How SST replaced GST in 2018, the new 8% Service Tax effective March 2024, and how to encode rates correctly on MyInvois e-invoices.
Sales and Service Tax (SST) is the indirect tax regime that replaced the Goods and Services Tax (GST) on 1 September 2018, returning Malaysia to a single-stage tax model administered by the Royal Malaysian Customs Department (Jabatan Kastam Diraja Malaysia, JKDM). SST is composed of two separate taxes: Sales Tax charged at 5% or 10% on manufactured and imported goods, and Service Tax charged at 8% on prescribed taxable services since 1 March 2024 (raised from 6%). Registration is compulsory once the annual taxable turnover exceeds RM500,000, and each registered person must submit bi-monthly SST returns to Customs in addition to issuing MyInvois e-invoices that correctly encode the tax category and rate per line.
- Sales Tax 5%: basic foodstuffs, construction materials, IT products.
- Sales Tax 10%: default rate for most other manufactured goods.
- Service Tax 8%: prescribed services from 1 March 2024 (was 6%).
- Threshold RM500,000: mandatory registration with Royal Malaysian Customs.
How it works
Confirm whether your activity falls under Sales Tax (manufacturing or import of goods listed in the Sales Tax (Goods Exempted From Tax) Order 2018) or Service Tax (prescribed services in the Service Tax Regulations 2018: hospitality, food and beverage, telecoms, insurance, professional services, digital services and management consultancy). A single business can be liable for both regimes simultaneously.
Register with the Royal Malaysian Customs Department through the MySST portal once your annual taxable turnover crosses RM500,000 (different threshold for some services such as F&B at RM1.5 million). Registration is on a rolling 12-month basis: if the threshold is exceeded in any 12-month period you must register within 28 days.
Apply the correct rate per invoice line on MyInvois. The Malaysian e-Invoice schema requires a Tax Type code (01 Sales Tax, 02 Service Tax, 03 Tourism Tax, 06 Exempt) and a Tax Rate field expressed as a percentage. From 1 March 2024 onwards Service Tax lines must use 8% (the previous 6% is only valid for invoices dated before that cut-off).
Issue tax invoices that show the SST registration number, the rate applied per line and the total tax separately from the goods or services value. The Customs Act 1967 and the SST Acts require a standardised invoice content; MyInvois enforces this through its schema validation rules, so non-compliant invoices are rejected.
File SST returns (SST-02 form) every two months through MySST, covering the bi-monthly taxable period. The return reconciles output tax collected against credit notes, debit notes and any bad debt relief. SST returns and MyInvois data are cross-checked by both Customs and LHDN; large discrepancies trigger audits under the SST Acts and the Income Tax Act 1967.
Legal framework
- Sales Tax Act 2018 (Act 806).
- Service Tax Act 2018 (Act 807).
- Service Tax (Amendment) Regulations 2024 — 8% rate.
- Royal Malaysian Customs SST Guides (multiple, MySST portal).
Frequently asked questions
When did Service Tax move from 6% to 8%?
On 1 March 2024 under Service Tax (Rate of Tax) (Amendment) Order 2024. The 6% rate is preserved for a few specific services (food and beverage, telecoms prepaid, parking, logistics) which remain at 6%, while the standard rate for most prescribed taxable services rose to 8%. Invoices issued before 1 March 2024 use the old 6% rate; invoices on or after that date must use 8% for services in scope.
Is SST the same as VAT or GST?
No. SST is a single-stage tax charged only at the point of manufacture or import (Sales Tax) or at the point of supply of a prescribed service (Service Tax). Unlike GST or VAT, there is no input tax credit mechanism — businesses cannot reclaim SST paid on inputs. This is why Malaysia abolished GST in 2018: SST is administratively simpler but distorts pricing through tax-on-tax cascading.
Are exports subject to Sales Tax?
No. Goods exported from Malaysia are zero-rated under the Sales Tax Act 2018 provided proper export documentation exists (Customs Form K2, bill of lading or airway bill, commercial invoice, payment evidence). For Service Tax, services provided to recipients outside Malaysia and consumed outside Malaysia are generally not within scope — but the test is narrow and depends on the type of service.
What is the SST registration threshold?
RM500,000 of annual taxable turnover for most activities. Higher thresholds apply for certain services: RM1.5 million for food and beverage establishments, and RM1.5 million for credit card and charge card services. The threshold is measured on a rolling 12-month basis. Voluntary registration below the threshold is allowed and useful for businesses that want to issue tax invoices to corporate customers.
How does MyInvois validate SST rates?
The MyInvois schema enforces a Tax Type code per line and a corresponding Tax Rate. If a supplier marks a line as Service Tax (code 02) but uses a rate that does not match the current LHDN reference (6% for the preserved categories, 8% for the standard category, 0% for exempt), the validation engine returns an error. LHDN updates the reference table whenever Customs amends the SST rates by ministerial order.