SST vs GST Malaysia 2025 — What SMEs Need to Know

SST and GST: Why the Confusion Persists

Malaysia replaced GST with SST in 2018. Seven years ago. And yet SME owners — especially those who started their businesses post-2018 or weren't caught in the GST registration net — still conflate the two.

It's understandable. Both are indirect taxes. Both involve the words "goods and services." Google serves up results for both whenever you search "Malaysia consumption tax." And accounting firms sometimes explain one by referencing the other.

But they're structurally different. Knowing the difference will tell you immediately whether your business is affected at all.

GST was multi-stage. It applied at every level of the supply chain — manufacturer to wholesaler to retailer to consumer. Every registered business collected 6% GST and reclaimed input tax credits. The threshold was low (RM500,000 for most businesses). Nearly every business above a modest size had to register.

SST is single-stage. Sales Tax hits only manufacturers and importers. Service Tax hits only service providers in specific taxable categories. Retailers, wholesalers, and distributors are out of the loop. There are no input tax credits. Most SMEs — especially those in retail, trading, or non-taxable services — don't need to register at all.

Whether SST matters to your business comes down to one question: what exactly does your business do?

The 2018 Transition: What Actually Happened

The switch wasn't clean or instant. There was a gap period that confused many SME owners in Kuala Lumpur and Penang who weren't paying close attention to the exact implementation dates.

Date	What Changed	Key Impact for SMEs
1 April 2015	GST introduced at 6%	Replaced old Sales Tax Act 1972 and Service Tax Act 1975. All registered businesses collected 6% GST on virtually all goods and services.
1 June 2018	GST zero-rated (0%)	GST technically still in force but all goods and services rated at 0%. Businesses still had to file GST returns — nil returns if applicable.
1 September 2018	SST reintroduced; GST repealed	Sales Tax Act 2018 and Service Tax Act 2018 came into force. GST Act 2014 repealed. All GST registrations cancelled. Businesses required to assess SST liability from scratch.
1 March 2024	Service Tax rate increase for selected categories	Professional services, IT services, logistics, and selected B2B service categories increased from 6% to 8%. Hospitality, F&B, and most consumer services remain at 6%.

GST is gone. If someone mentions "Malaysia GST" as a current obligation, correct them. What exists now is SST — and the two systems work very differently from each other.

Do You Need to Register for SST?

Most Malaysian SMEs do not need to register for SST. The tax scope is narrow. Two questions to answer first:

1. Is your business a manufacturer of taxable goods? If yes, Sales Tax may apply.
2. Does your business provide taxable services? If yes, Service Tax may apply.

Retailers, wholesalers, distributors, importers for resale, and businesses providing non-taxable services (education, healthcare, residential property, financial services) are generally outside the SST net — regardless of turnover size.

Tax Type	Who Must Register	Threshold	Registration Deadline After Exceeding Threshold
Sales Tax	Manufacturers of taxable goods (including contract manufacturers); importers of taxable goods for own use or consumption	RM500,000 annual taxable turnover	Within 30 days
Service Tax	Providers of taxable services listed in the First Schedule of Service Tax Regulations 2018	RM1,500,000 annual taxable turnover	Within 30 days

Voluntary registration is allowed if you are below the threshold. This can make sense for B2B service providers whose clients prefer to deal with Service Tax-registered vendors for their own cost allocation and compliance purposes.

Which Industries Must Register: A Practical List

Sales Tax — manufacturers of these goods must register if turnover exceeds RM500,000:

• Processed and packaged food and beverages
• Tobacco and tobacco products
• Building materials (steel bars, tiles, sanitary fittings)
• Chemicals and chemical products
• Petroleum products and lubricants
• Rubber and plastic products
• Paper and paper products
• Industrial machinery and equipment
• Electrical and electronic goods
• Vehicles and vehicle components
• Furniture and furnishings
• Clothing, footwear, and textiles

Manufacturers of exempt goods — fresh produce, basic grains, medicine, fertilisers, and items listed in the Sales Tax (Goods Exempted from Tax) Order 2018 — do not need to register regardless of turnover.

Service Tax — these service categories are taxable (RM1.5M threshold applies):

• Hotels, motels, inns, serviced apartments, and chalets
• Restaurants, food courts, caterers, and canteens (above RM1.5M turnover)
• Nightclubs, entertainment venues, health spas, and massage establishments
• Professional services: lawyers, accountants, engineers, architects, and business consultants
• IT and IT-enabled services: software development, cloud services, cybersecurity, SaaS
• Telecommunications services
• Insurance and takaful
• Advertising and media services
• Employment and recruitment agencies
• Logistics, courier, and freight services
• Parking services
• Betting, gaming, and gambling

Exempt from Service Tax (no registration needed regardless of size):

• Education and training services
• Healthcare, medical, and veterinary services
• Financial services: banking, Islamic finance, fund management, money broking
• Residential property transactions
• Public transport
• Government services

Running a JB-based IT consultancy or a Penang recruitment firm above RM1.5M? Service Tax applies. Running a private clinic or a tuition centre? You're outside the scope entirely.

SST Rates: What Gets Taxed at What Rate

SST does not use a single flat rate. The rate depends on the type of good or service. Here's the breakdown:

Tax	Rate	Applies To
Sales Tax	10%	Standard taxable goods — most manufactured goods not in the exempt or reduced-rate list
Sales Tax	5%	Selected goods — certain food preparations, specific building materials, selected chemicals on the reduced-rate schedule
Sales Tax	0% (exempt)	Exempt goods — basic foodstuffs (fresh produce, grains, meat), medicine, books, agricultural inputs, and goods listed in the Sales Tax (Goods Exempted from Tax) Order 2018
Service Tax	8%	Professional services (legal, accounting, engineering, consulting), IT and IT-enabled services, telecommunications, logistics, and employment agencies — effective 1 March 2024
Service Tax	6%	Hotels and accommodation, food and beverage establishments, insurance and takaful, parking, betting and gaming — rate unchanged from SST reintroduction in September 2018

The March 2024 rate increase to 8% applies only to the specific categories in the updated Service Tax (Amendment) Regulations 2024. If you are unsure which rate applies to your service, RMCD's MySST portal carries the current official classification lists.

How to Register on the MySST Portal

Registration is done entirely online. No walk-in to a Customs office needed. Here's the step-by-step:

1. Visit mysst.customs.gov.my and click "Daftar / Register."
2. Log in with your MyGovID. If you don't have one, register at id.gov.my first — it takes about 10 minutes.
3. Select your registration type — Sales Tax, Service Tax, or both. If your business manufactures goods and provides taxable services, register for both in the same session.
4. Enter your business details — SSM registration number, business name, address, and Tax Identification Number (TIN) from LHDN.
5. Enter your financial information — estimated annual taxable turnover, financial year end, and business bank account number for any future refunds.
6. Upload supporting documents — SSM Form 9 (or Forms D/B for partnerships/sole proprietors), business bank statement, and director/owner IC copy.
7. Submit and wait for RMCD approval. Processing typically takes 10–14 working days. Your SST registration certificate will be issued digitally on the portal.

Once approved, you'll receive your SST registration number (format: SST-XXXXXXXX). This number must appear on every tax invoice you issue for taxable goods or services.

When and How to File Your SST Return

SST operates on a bi-monthly cycle. Every two months, you file an SST-02 return and remit the tax collected.

Your taxable period is two consecutive calendar months. RMCD assigns your start month when you register. The SST-02 return and payment are due by the last day of the month following the end of your taxable period.

Example filing schedule (for a business with taxable period starting January):

• Jan–Feb period → SST-02 due by 31 March
• Mar–Apr period → SST-02 due by 31 May
• May–Jun period → SST-02 due by 31 July
• Jul–Aug period → SST-02 due by 30 September
• Sep–Oct period → SST-02 due by 30 November
• Nov–Dec period → SST-02 due by 31 January

You must file your SST-02 return even if you had zero taxable transactions that period. Nil returns are required. Missing a nil return counts as a non-filing offence.

Filing is done through the MySST portal. Payment can be made via FPX online banking, cheque payable to RMCD, or bank transfer to the RMCD collection account.

Penalties for Non-Registration and Late Filing

RMCD takes SST compliance seriously. The penalties are material enough to warrant getting this right before you hit the threshold.

Failure to register when liable (Sales Tax Act 2018 / Service Tax Act 2018):

• Fine up to RM30,000, or imprisonment up to 2 years, or both
• Assessment of all SST due from the date you became liable — going back as far as RMCD can establish
• 10% surcharge on the total outstanding tax assessed

Late filing of SST-02 return:

• 5% penalty on tax due — filed within 30 days of due date
• 10% penalty — filed 31–60 days late
• 15% penalty — filed more than 60 days late

Late payment (return filed on time, payment delayed):

• 5% surcharge on the outstanding amount, with additional monthly surcharges for ongoing delay

The non-registration penalty is what catches businesses off guard. If you have been above the threshold for 18 months without registering, RMCD can assess 18 months of back-tax plus a 10% surcharge on the full amount. That's a significant liability to discover during a routine RMCD audit.

SST and MyInvois E-Invoice: Two Separate Obligations

This is the point most SME owners miss — especially those who recently completed their MyInvois e-invoice onboarding and assumed that covered all their tax obligations.

It doesn't. SST and e-invoice (MyInvois) are administered by different government agencies and operate through different systems.

• MyInvois is run by LHDN (Inland Revenue Board). It's an e-invoicing format requirement for businesses above the annual turnover phase-in threshold. You issue e-invoices through the MyInvois portal or integrated software API. This applies regardless of whether you're SST-registered.
• SST is run by RMCD (Royal Malaysian Customs Department). You collect Sales Tax or Service Tax on taxable transactions, then remit it bi-monthly via SST-02 returns through the MySST portal.

If your business is both SST-registered and MyInvois-obligated, your e-invoice issued through MyInvois must include:

• Your SST registration number
• The SST rate applied to each line item
• The SST amount charged
• The total amount inclusive of SST

You then file the SST separately with RMCD. MyInvois does not transmit your SST filing to RMCD — they are parallel systems that do not talk to each other.

Having a MyInvois account does not make you SST-compliant. Being SST-registered does not satisfy your MyInvois obligations. Both apply.

SST vs Corporate Tax: Two Completely Different Obligations

A final distinction worth being explicit about.

Corporate income tax is what you pay LHDN annually on your company's net profit — 17% for SMEs on the first RM600,000 of chargeable income, 24% on the rest. You file Form C through MyTax, with the deadline typically 7 months after your financial year end (30 April 2026 for companies with a 31 December financial year). For the full picture, see our corporate tax guide for SMEs and our step-by-step Form C e-filing walkthrough.

SST is an indirect tax you collect from your customers on behalf of RMCD. It is not a tax on your profit. You are the collection agent — the money never belonged to you. You collect it on each taxable sale and remit it to RMCD every two months.

Missing your SST returns does not reduce your corporate tax liability. Overpaying SST does not give you a credit against your income tax. They are entirely separate financial streams managed by separate agencies on separate timelines.

If you just filed your corporate tax return before the April 30 deadline and are now reviewing all your compliance obligations — SST is the right place to look next. Many SME owners discover during post-filing reviews that they have been above the SST registration threshold for longer than they realised.

Frequently Asked Questions