SST Registration in Malaysia: Thresholds and Sector Rates

Malaysia's indirect tax regime since 2018 is the Sales and Service Tax (SST), replacing the earlier Goods and Services Tax. It is administered by the Royal Malaysian Customs Department (RMCD) through the MySST portal and is split into two parallel taxes: Sales Tax on manufactured and imported goods, and Service Tax on prescribed taxable services. The 2024 and 2025 budgets expanded the scope significantly. This guide explains who must register, the thresholds, the rates, and what recent changes mean for new businesses.

Service Tax — the standard regime

Service Tax is a single-stage tax charged by registered providers of taxable services. Key parameters:

• Standard rate: 8% on most services (raised from 6% effective 1 March 2024).
• 6% rate retained on food & beverage, telecoms, parking, and logistics.
• Registration threshold: RM 500,000 in taxable service turnover in the past 12 months, or projected forward 12-month basis.
• Higher RM 1,500,000 threshold for: food and beverage service (Group B), customs agents, brokerage and underwriting, and certain construction-related professional services.

Taxable services are grouped (A through K under the Service Tax Regulations 2018) and include hotels, F&B, professional services (legal, accounting, engineering, consultancy), credit cards, telecoms, IT services (since 2020), digital services from foreign providers, management services, employment services, and logistics. The 2024 expansion added logistics, brokerage, underwriting, and karaoke as new taxable categories.

Sales Tax — manufactured and imported goods

• Rates: 5% (basic goods), 10% (standard goods), or exempt depending on HS code. Some luxury items can attract higher specific rates.
• Registration threshold: RM 500,000 in taxable goods turnover in the past 12 months.
• Who registers: manufacturers of taxable goods (regardless of whether they hold a Manufacturing Licence) and certain importers. Sub-contract manufacturers can apply for the Approved Manufacturer scheme.
• Exemption regimes: exporters can apply for an exemption on raw materials; the Approved Trader Scheme (ATS) and Licensed Manufacturing Warehouse (LMW) regimes are used by exporters for cash-flow relief.

Low Value Goods (LVG) tax

Since 1 January 2024, online sales of low-value goods (≤ RM 500 consignment value) imported into Malaysia by registered foreign sellers are subject to a flat 10% LVG tax. Foreign platforms exceeding RM 500,000 in annual sales to Malaysian consumers must register through MySST.

Digital service tax

Foreign providers of taxable digital services (streaming, software, online ads, e-books, online education) charge Service Tax at the prevailing rate (8% from 1 March 2024) to Malaysian consumers, and register under the Foreign Registered Person (FRP) regime if turnover from Malaysia exceeds RM 500,000 per year.

What changed in 2024 and what is changing in 2026

• Rate hike (March 2024): service tax raised from 6% to 8% for most categories; F&B, telecoms, parking, and logistics kept at 6%.
• Scope expansion (2024): logistics, karaoke, brokerage and underwriting added.
• Capital goods sales tax (2025): ongoing consultations on extending sales tax to certain capital goods that were previously exempt.
• 2026 review: Treasury has signalled further fine- tuning of the threshold structure and a likely streamlining of group-based registration rules. Confirm before relying on the current RM 500k / RM 1.5M split.

Registration process

1. Check eligibility: compare past 12 months and projected next 12 months turnover against the relevant threshold.
2. MySST account: register through mysst.customs.gov.my within 30 days of crossing the threshold.
3. RMCD reviews and issues a certificate with a registration number.
4. Begin charging SST from the effective date stated on the certificate. Bi-monthly returns and payments.
5. e-Invoice integration — the SST registration number is a required field in the LHDN e-Invoice flow. See the e-Invoice phase planner.

Common mistakes

• Treating gross billing as taxable turnover: for professional services, only the actual fee component is taxable; out-of-pocket disbursements are usually excluded.
• Late registration: 30-day window from threshold crossing; RMCD can backdate the effective date and demand tax for the gap.
• Missing sub-contracted services: if you engage regulated foreign service providers (legal, consulting from abroad), you may need to self-account under the imported taxable services regime.
• Mixing exempt and taxable supplies without proper apportionment — common for IT companies with both software (taxable) and hardware reseller (exempt) lines.

Sector quick reference

• Restaurants (MSIC 56): RM 1.5M threshold, 6% rate. See our restaurant setup guide.
• E-commerce (MSIC 47911): RM 500k threshold. Goods sold may also carry sales tax depending on HS code. See the e-commerce setup guide.
• IT services (MSIC 62): RM 500k threshold, 8% rate.
• Construction (MSIC 41–43): RM 1.5M threshold, 8% rate.
• Consulting and professional services (MSIC 69, 70, 71): RM 500k threshold, 8% rate.
• Manufacturers of taxable goods: RM 500k threshold; sales tax 5% or 10% by HS code.

Sources: RMCD MySST; Sales Tax Act 2018; Service Tax Act 2018; Service Tax Regulations 2018; Sales Tax (Imposition of Tax in respect of Designated Areas) Order; Budget 2024 and 2025 announcements.