In Malaysia, the Sales and Service Tax (SST) system was introduced in September 2018. This system replaced the previous Goods and Services Tax (GST) and has since been implemented as an indirect tax.
SST consists of the following two types of taxes:
Sales Tax:
This tax is imposed on manufacturers or importers when selling taxable goods. The standard rate is 10% (although some goods are subject to 5% or a specific rate).
Service Tax:
This tax is imposed on businesses that provide designated services at a rate of 6%. The main categories subject to this tax include hotels, food and beverage services, telecommunications, and professional services (such as consulting).
Key Features
- To avoid double taxation, SST is not broadly imposed at the consumer level, but is instead limited to the manufacturing stage or the provision of services.
- Tax is not automatically applied to all transactions; only businesses exceeding a certain sales threshold are required to register.
- Export transactions are exempt from SST, ensuring competitiveness in international trade.
Summary
Compared with the former GST, Malaysia’s SST has a more limited scope, with taxable entities mainly consisting of manufacturers and providers of specific services. Therefore, it is essential for companies to accurately determine whether they fall within the taxable scope and manage their tax obligations appropriately.
For further details, please contact Phoenix Malaysia.
