Introduced in September 2018, SST replaced the former 6% Goods and Services Tax (GST) system. SST comprises two parts: Sales tax and Service tax. Sales tax is a single-stage tax levied on all taxable goods manufactured in and imported into Malaysia; whereas Service tax is a single-stage tax charged on any taxable services provided in Malaysia by a registered person in conducting the business. Malaysia has a few special designated areas that are exempted from service tax, namely Langkawi Island, Tioman Island and Federal Territory of Labuan.
Goods that are manufactured in or imported into Malaysia, other than petroleum, are all taxable goods at the manufacturer level if the total sales value of taxable goods in the past 12 months exceeds RM500,000. The standard rate of 10% is applicable for most taxable goods. A reduced rate of 5% are applicable for certain taxable goods, such as certain prepared food, printers, mobile phones etc. A specific rate of RM0.30 per litre is applicable for petroleum products. There are also certain goods that are exempted from Sales tax, which full list you may find in Sales Tax (Goods Exempted From Tax) Order 2018.
Services that are taxable are listed in Sales Tax Regulations 2018, and include accommodation, food and beverages, health and wellness centres etc. Service providers that provide total value of taxable services in the past 12 months that exceed RM500,000 threshold are liable to register to pay service tax, with the exception of the following:
|Taxable service||Value of taxable service|
|Accommodation, Night clubs, Dance halls, Health centres, Massage parlours, Public houses, Beer house, Private clubs, Golf club & Golf driving range, Betting & gaming, Professional services, Other|
|Food and Beverages||RM 1,000,000|
|Credit card/ Charge card and Forwarding Agents||No threshold|
The standard rate of service tax is 6% and is applicable to all service providers, except for credit card or charge card providers, who are taxed at RM25 per year on each principal or supplementary card.
A taxable person is a person who manufactures taxable goods or provides taxable services and is liable to be registered if the annual turnover has exceeded threshold subject to industry of goods or services provided. Such a person is required to be registered on respective Sales Tax and Service Tax pages under the MySST system.
When to File and Penalties
A registered taxable person has to declare sales tax return every two months according to the taxable period, regardless of whether there is any tax to be paid. The duration of your first taxable period is dependent on the month of when your financial year ends. Sales tax return has to be submitted not later than the last day of the following month after the taxable period ended. Sales tax returns can be submitted electronically on the MySST System, or by post to Customs Processing Center (CPC). Payments can be made on the portal for taxable persons who did an electronic submission, or by cheque or bank drafts that can be posted to the CPC together with the sales tax returns. Penalties for late payment are as follow:
|Duration pass last day of payment||Penalty percentage|
|First 30 day period||10%|
|Second and third 30 day period||15%|
|After 90 day period||Maximum of 40%|
Contact us for Company Secretarial services
We hope that this brief guide on SST is helpful and is able to help you understand the system better. You may also refer to the general guide on MySST system here. A gentle reminder for you to seek advice from a tax advisor and that information provided in this article is for general reference only. Quadrant Biz Solutions are available to provide any assistance to incorporate your company and attend to other company secretarial matters. Contact us today!