Malaysia SST guidelines
| FACTSHEET | |
|---|---|
| Country code | MY |
| Tax name | Sales Tax and Service Tax (SST) — not a VAT |
| Tax Authority | Royal Malaysian Customs Department (RMCD / JKDM) |
| E-invoicing authority | Inland Revenue Board of Malaysia (IRBM / LHDN) — MyInvois |
Overview
Malaysia does not operate a VAT. It runs SST — Sales Tax and Service Tax — two separate taxes administered by the Royal Malaysian Customs Department (RMCD, or JKDM) through the MySST portal at mysst.customs.gov.my. Getting this framing right matters, because SST behaves very differently from the VAT and GST regimes elsewhere in ASEAN:
- Sales tax is a single-stage tax levied on imported and locally manufactured goods, charged either at the time of importation or at the time the goods are sold by the registered manufacturer. [1]
- Service tax is charged and levied on prescribed taxable services provided by a taxable person in Malaysia, and on imported taxable services. The taxable services are listed by group in the First Schedule to the Service Tax Regulations 2018. [1]
- There is no input tax credit mechanism. SST charged by a supplier is a cost to the recipient, not a recoverable input. Relief comes instead from targeted devices — sales tax exemption schedules, business-to-business (B2B) exemptions, group relief, and Ministerial exemptions granted under section 34 of the Service Tax Act 2018. [1] [2]
The Service Tax Act 2018 took effect on 1 September 2018, replacing GST. [2] A major scope expansion took effect on 1 July 2025, broadening the sales tax base (Sales Tax (Rate of Sales Tax) (Amendment) Order 2025, P.U.(A) 199/2025, published 1 July 2025) and widening the taxable service groups — Group H was renamed from credit and charge card services to financial services, and rental or leasing services (Group K) and construction work services (Group L) were prescribed as taxable. [3] [5] [6]
Because much of the expansion was rolled out ahead of the subsidiary legislation, RMCD governs the detail through numbered Service Tax Policies published on the MySST portal — several of which were amended in June and July 2026. See Recent changes.
Tax IDs and SST registration
Malaysian businesses deal with two different administrations and two different identifiers:
- Tax Identification Number (TIN) — issued by the Inland Revenue Board of Malaysia (IRBM/LHDN), and mandatory on every e-invoice. Businesses can retrieve their TIN through the MyTax portal at mytax.hasil.gov.my; if no TIN can be retrieved, they register through the e-Daftar option in MyTax to obtain one. [1]
- SST registration number — issued by RMCD on approval of a sales tax or service tax registration made through the MySST portal at mysst.customs.gov.my. A registered person's number and status can be checked through the RMCD enquiry service at esemakan.customs.gov.my. [2]
Key registration mechanics:
- Sales tax: a taxable person is a person who manufactures taxable goods and is liable to be registered once annual turnover exceeds the RM500,000 threshold. Voluntary registration is available to manufacturers of taxable goods below the threshold. [3]
- Service tax: any person providing taxable services is liable to be registered once the total value of taxable services provided in 12 months exceeds the threshold prescribed for that group. [4] Thresholds are set per taxable service group, not per business — see Registration thresholds.
- Existing registrants adding a new group: a service provider already registered must update its registration details in the MySST portal to add the new service type and begin charging service tax from the effective date. [2]
- Returns: the standard taxable period is bimonthly (every two months) for both sales tax and service tax. [4] A registered person files the SST-02 return no later than the last day of the month following the end of the taxable period. [2]
- Foreign digital service providers: a foreign service provider (FSP) supplying digital services to consumers in Malaysia is liable to register as a registered foreign person once the total value of digital services provided to consumers in Malaysia exceeds RM500,000 per year, a regime effective from 1 January 2020. [5]
To check a Malaysian tax identification number, use our Malaysia TIN validator. For the TIN format itself — the IG-prefix individual number, entity prefixes and NRIC — see our Malaysia TIN number guide; for the SSM company registration number (BRN), see How to verify a registration number in Malaysia.
Rates
| Tax | Rate | Applies to |
|---|---|---|
| Sales tax | 5%, 10%, or a specific rate | Taxable goods manufactured in or imported into Malaysia; the applicable rate depends on the goods, per the Sales Tax (Rates of Tax) orders [1] [2] |
| Service tax (standard) | 8% | All taxable services except those carved out below, since 1 March 2024 [3] |
| Service tax (reduced) | 6% | Food and beverage, logistics, telecommunications and parking services [3] |
| Service tax — rental or leasing (Group K) | 8% (1 Jul – 31 Dec 2025), then 6% from 1 Jan 2026 | Rental or leasing of tangible assets; the 6% rate was fixed by P.U.(A) 125, the Service Tax (Rate of Tax) (Amendment) Order 2026, gazetted 13 March 2026 [4] [5] |
| Service tax — construction work (Group L) | 6% | Construction work services, as prescribed under the Service Tax (Rate of Tax) (Amendment) Order 2025 [6] |
| Service tax — credit and charge cards | RM25 per card | Charged on the date the card is activated and every 12 months thereafter; no registration threshold applies to this item [3] [7] |
NB: interest, profit rate, spreads and punitive charges (late payment charges, dishonoured-cheque charges, overdraft excess fees, policy surrender fees) are not subject to service tax under Group H — only the fee, commission or similar payment is. [7]
Source snapshot captured 2026-07-28 — original
Registration thresholds
Malaysia does not use one nationwide threshold. Each tax — and each taxable service group — has its own, tested over a 12-month period.
| Registration | Threshold (12 months) |
|---|---|
| Sales tax (manufacturer of taxable goods) | Annual turnover exceeding RM500,000 [1] |
| Service tax — financial services (Group H) | RM1,000,000 per 12-month period [2] |
| Service tax — rental or leasing services (Group K) | Exceeding RM1 million per 12-month period [3] |
| Service tax — construction work services (Group L) | Exceeding RM1,500,000 per 12-month period [4] |
| Service tax — credit / charge card facilities | No threshold — the RM25 per-card charge applies regardless [2] |
| Digital services by a foreign service provider | Exceeding RM500,000 per year of digital services to consumers in Malaysia [5] |
Three counting rules catch businesses out:
- Exempted supplies still count — Group K. For Group K, the threshold calculation includes the value of rental or leasing services that the Minister of Finance has exempted under section 34(3)(a) or 34(4) of the Service Tax Act 2018. [3] RMCD states this rule for Group K; do not assume it carries across to other groups without checking that group's own industry guide.
- Excluded supplies do not count. Services that fall outside the scope of service tax — for example Group H services relating to goods, land or matters outside Malaysia — are left out of the threshold calculation entirely. [2]
- Joint suppliers test separately. Persons who jointly provide rental or leasing services under a single agreement are treated as separate entities and register individually on their own taxable turnover, invoicing their own portion of the rental value — unless one undivided invoice is issued in a single party's name, in which case that party alone carries the obligation. This applies from 1 July 2025. [6]
Source snapshot captured 2026-07-28 — original
Group K also carries a set of exemptions that reduce the tenant's cost without changing the lessor's threshold test: MSME tenants registered in RMCD's MyPMK system are exempt from paying service tax on rental or leasing (annual sales below RM1 million from 1 July 2025; above RM1 million and below RM1.5 million from 1 January 2026), and newly established MSMEs are exempt for one year from their SSM registration date, effective 1 January 2026. Both require paid-up ordinary share capital not exceeding RM2.5 million. [5]
E-invoicing status — MyInvois
E-invoicing in Malaysia is run by the Inland Revenue Board of Malaysia (IRBM/LHDN), not by RMCD, through the MyInvois platform at myinvois.hasil.gov.my. It is a clearance model: the supplier creates an e-invoice and submits it to IRBM for validation before it is shared with the buyer. E-invoices can be submitted through the MyInvois Portal or by API. [1]
The mandatory implementation timeline is set by annual turnover or revenue, measured on the financial year 2022 audited accounts (or the year of assessment 2022 tax return where there are no audited accounts). Once a taxpayer's date is fixed, later changes in turnover do not move it. [1]
| Targeted taxpayers | Mandatory implementation date | Interim relaxation period |
|---|---|---|
| Annual turnover or revenue more than RM100 million | 1 August 2024 | 1 August 2024 to 31 January 2025 |
| More than RM25 million and up to RM100 million | 1 January 2025 | 1 January 2025 to 30 June 2025 |
| More than RM5 million and up to RM25 million | 1 July 2025 | 1 July 2025 to 31 December 2025 |
| Up to RM5 million | 1 January 2026 | Until 31 December 2027 |
| New businesses commencing 2023–2025 with annual turnover of at least RM1,000,000 | 1 July 2026 | Until 31 December 2027 |
Sources: IRBM e-Invoice Guideline Version 4.7 (Table 1.1) and e-Invoice Specific Guideline Version 4.8 (Table 16.1), both published 7 July 2026. [1] [2]
Source snapshot captured 2026-07-28 — original
Two points do most of the work in practice:
- The RM1 million exemption. Taxpayers with an annual turnover or revenue of less than RM1,000,000 are exempted from issuing e-invoices, including self-billed e-invoices. Other exempted persons are foreign diplomatic offices, individuals not conducting business, and certain statutory bodies and international organisations for transactions before 1 July 2025. Suppliers to exempted persons must still issue e-invoices themselves. [1]
- The relaxation period is not a deferral of the mandate. During the interim relaxation period a taxpayer may issue a consolidated e-invoice (and consolidated self-billed e-invoice) for all activities, may put any description in the "Description of Product or Service" field, and may decline a buyer's request for an individual e-invoice. IRBM will not take prosecution action under section 120 of the Income Tax Act 1967 for e-invoice non-compliance during the period, provided the consolidated-invoice conditions are met. For taxpayers with turnover up to RM5 million this runs until 31 December 2027. [2]
Note the split of authority: MyInvois is an income tax obligation issued under section 134A of the Income Tax Act 1967, while SST registration, rates and returns sit with RMCD. Being outside the MyInvois mandate says nothing about SST liability, and vice versa. [1]
Recent changes
- 2026-07-22 — RMCD Service Tax Policy No. 2/2025 (Amendment No. 5) revokes and replaces Amendments No. 1–4 and confirms the service tax rate on rental or leasing services (Group K) is 6% from 1 January 2026, following the gazetting of P.U.(A) 125, the Service Tax (Rate of Tax) (Amendment) Order 2026, on 13 March 2026, which revoked the interim 2% rate exemption; Appendix B sets the refund route for overpaid tax, and a new Item 9 exempts newly established MSME tenants for one year from their SSM registration date. (Royal Malaysian Customs Department) — see issue
- 2026-07-22 — RMCD Service Tax Policy No. 4/2026 provides that persons jointly supplying rental or leasing services under a single agreement are treated as separate entities, register individually on their own threshold value and invoice their own portion; where one undivided invoice is issued in a single party's name, that party carries the registration obligation. Effective 1 July 2025. (Royal Malaysian Customs Department) — see issue
- 2026-07-01 — RMCD Service Tax Policy No. 1/2025 (Amendment No. 5) adds Item 14 exempting fees and commissions on Transactional Investment Account-i (TIA-i) operations from 1 June 2026 (no refund for 1 July 2025 to 31 May 2026), and confirms the non-reviewable-contract exemption for Group H financial services ran only to 30 June 2026 — services provided on or after 1 July 2026 are taxable. (Royal Malaysian Customs Department) — see issue
- 2026-06-24 — RMCD Service Tax Policy No. 3/2026 provides that maintenance charges and sinking fund contributions charged by a Joint Management Body (JMB) or Management Corporation (MC) to property owners are not subject to service tax, for both residential and non-residential buildings; for non-residential premises this is granted as a section 34(3)(a) exemption effective 1 July 2026 until the Service Tax Regulations 2018 amendment is gazetted, with no exemption for periods before that date. (Royal Malaysian Customs Department) — see issue
- 2026-06-18 — RMCD Service Tax Policy No. 2/2026 exempts construction work services carried out on completed residential buildings (Group L) from service tax with effect from 1 July 2025, subject to documentary conditions; providers that had charged and remitted the tax could claim a refund if the claim was submitted on or before 30 June 2026. (Royal Malaysian Customs Department) — see issue
Reference links
- MySST — Royal Malaysian Customs Department SST portal
- RMCD — Understanding SST
- RMCD — Service Tax FAQ (rates)
- RMCD — Sales Tax FAQ (rates and threshold)
- RMCD — SST Orders (P.U.(A) instruments)
- RMCD — Service Tax Policies index
- RMCD — Guide on Financial Services (Version 2, 24 October 2025)
- RMCD — Guide on Construction Work Services (17 March 2026)
- IRBM — e-Invoice Guideline (Version 4.7, 7 July 2026)
- IRBM — e-Invoice Specific Guideline (Version 4.8, 7 July 2026)
- IRBM — e-Invoice general FAQs
Frequently Asked Questions
Is Malaysia's SST a VAT? Can I claim back the SST charged by my suppliers?
No. Malaysia repealed GST in 2018 and runs Sales Tax and Service Tax under the Sales Tax Act 2018 and the Service Tax Act 2018, both effective 1 September 2018. Sales tax is a single-stage tax on imported and locally manufactured goods, charged at importation or when the registered manufacturer sells the goods; service tax is charged on prescribed taxable services provided in Malaysia and on imported taxable services. Neither carries a VAT-style input tax credit — SST paid on business purchases is a cost. Relief is delivered instead through sales tax exemption schedules, B2B exemptions, group relief and Ministerial exemptions under section 34 of the Service Tax Act 2018, each with its own conditions. [1] [2]
What service tax rate applies to rental or leasing services in Malaysia, and what happened to the 2% exemption?
Rental or leasing services (Group K, First Schedule, Service Tax Regulations 2018) became taxable on 1 July 2025 at 8%, and the rate is 6% from 1 January 2026. An interim 2% exemption on the rate had been granted pending subsidiary legislation; the gazetting of P.U.(A) 125, the Service Tax (Rate of Tax) (Amendment) Order 2026, on 13 March 2026 revoked that exemption and fixed the rate at 6% from 1 January 2026. Providers who overpaid can claim a refund under subsection 38(1)(b) of the Service Tax Act 2018 by lodging, with the controlling station, an official application letter, RMCD Form No. 2, the SST listing for the relevant taxable period, the rental agreement showing supply on or after 1 January 2026, the invoice, and proof that the tax was refunded to the tenant. [1] [2]
Source snapshot captured 2026-07-28 — original
Two of us jointly rent out a property under one tenancy agreement — do we test the RM1 million threshold together?
No. Under Service Tax Policy No. 4/2026 (22 July 2026, effective from 1 July 2025), persons who jointly provide rental or leasing services under a single agreement are treated as separate entities: each registers individually on its own total taxable services, and each issues an invoice for its own portion or breakdown of the rental value. The exception is a supply made as a whole under one agreement through a single invoice with no breakdown issued in the name of one party — for example a joint venture or a representative. That party is then treated as the rental or leasing service provider and is liable for registration once the threshold value is met. The Group K threshold is RM1 million over 12 months. [1] [2]
What changed for Malaysian financial services on 1 June and 1 July 2026?
Two things, both in Service Tax Policy No. 1/2025 (Amendment No. 5), dated 1 July 2026. First, a new Item 14 exempts fees and commissions charged on the operation of a Transactional Investment Account-i (TIA-i) from 1 June 2026 — covering cash deposits and withdrawals, payments and fund transfers, debit card issuance, basic counter and ATM transactions, and statement printing — with no refund for service tax paid for the period 1 July 2025 to 31 May 2026. Second, the non-reviewable contract exemption in Group H ran only from 1 July 2025 to 30 June 2026, so financial services provided under such contracts on or after 1 July 2026 are subject to service tax. [1]
When must a Malaysian business start issuing MyInvois e-invoices, and what if turnover is under RM1 million?
The IRBM e-Invoice Guideline (Version 4.7, 7 July 2026) sets four mandatory dates by annual turnover or revenue, measured on the FY2022 audited accounts or the YA2022 tax return: more than RM100 million from 1 August 2024; more than RM25 million and up to RM100 million from 1 January 2025; more than RM5 million and up to RM25 million from 1 July 2025; and up to RM5 million from 1 January 2026. New businesses that commenced operations between 2023 and 2025 with annual turnover of at least RM1,000,000 have an implementation date of 1 July 2026. Taxpayers with annual turnover or revenue of less than RM1,000,000 are exempted from issuing e-invoices, including self-billed e-invoices. Under Table 16.1 of the e-Invoice Specific Guideline (Version 4.8, 7 July 2026), taxpayers in the up-to-RM5-million band — both the 1 January 2026 and the 1 July 2026 dates — have an interim relaxation period until 31 December 2027, during which consolidated e-invoices are allowed and IRBM will not take prosecution action under section 120 of the Income Tax Act 1967 for e-invoice non-compliance, provided the consolidated-invoice conditions are met. [1] [2]
