As one of the fundamental taxes, SST is applicable to many businesses that provide taxable goods and services to customers. Learn more about SST via this FAQ.
Implemented since September 2018, SST has replaced Goods and Services Tax (GST) in Malaysia. The SST consists of 2 elements:
The following taxable goods and services are not applicable for goods and services providers under the special areas in Malaysia (including Langkawi Island, Tioman Island, and Labuan Federal Territory).
Taxable goods refer to all goods manufactured in or imported to Malaysia with a few exemptions as stated in Sales Tax (Goods Exempted from Tax) Order 2018, Sales Tax (Exemption from Registration) Order 2018, and Sales Tax (Persons Exempted from Payment of Tax) Order 2018. The complete lists can be found on the SST Orders page of the MySST website. These are some examples of goods exempted from Sales Tax:
Taxable services are any services listed in the First Schedule of the Service Tax Regulations 2018, which are divided into Group A to I. Digital service tax that is charged upon foreign digital service providers that came into effect on the 1st of January 2020 falls under Group I.
Some services under Groups G and I are exempted for businesses in which both service providers and service users are SST registered and fall under the same Group. For example, a law firm that is SST registered receives accounting services from an accounting firm which is also SST registered. The accounting services received by the law firm is exempted from the SST.
A taxable person is a manufacturer or a service provider who is registered or liable to register for SST. However, any businesses that are not liable to register or being exempted from the SST registration may apply voluntarily to the Director General (DG) of Customs to register for SST.
To be liable to register for SST, there are a few criteria to be met by businesses:
SST is an ad-valorem tax that is calculated through percentage, in proportion to the estimated value of the sales or services.
If your business is liable to register for SST, you may complete the Sales Tax registration or Service Tax registration respectively online at the MySST website. The due date for registration will be the last day of the month following the month in which the total sales value exceeded or is expected to exceed the threshold.
Here is an example:
If your business is exempted from Sales Tax under Sales Tax (Persons Exempted from Payment of Tax) Order 2018, an application should be made through the MySST website as well.
The taxable period of SST is a period of 2 calendar months. Hence, SST return must be filed every 2 months even if there is no tax to be paid. The SST payment should be done within 30 days from the end of the taxable period.
The timing to account for the respective transactions are different for Sales tax and Services tax:
Do note that the length of your first taxable period is determined based on whether your financial year-end month falls on odd or even month.
There are 2 ways to file the SST return:
Similar to the filing of SST return, there are 2 ways to make the SST payment:
Penalties will be imposed for the following offences:
The business will be expected to pay the SST out of their own pocket as the SST can no longer be collected from the customers.
Upon conviction, the fine and penalties are as follows:
Do note that failure to make SST payment and failure to make SST return are 2 separate and distinct offences. Upon conviction, the fine and penalties are as follows:
Upon expiration of 1 month from the taxable period, 10% is imposed on any outstanding SST for the first 30 days. Thereafter, for the second 30-day period, an additional 15% is imposed on any outstanding SST and for the third 30-day period, an additional 15%.
For the first offence,
For the second offence,
Special thanks to Wei Khee who helps out with the content of this article.
Disclaimer: Information provided in this article is for general reference only. It may not be applicable for East Malaysia. Please seek advice from company secretary, lawyer or other professionals according to your business's needs.