Published August 30, 2018 · Updated October 24, 2026
Why Is a Fixed Fifteen-Item List Not Enough for SST Exemption Checks in Malaysia?
SST exemptions in Malaysia are not a fixed list of 15 items. They follow the Sales Tax Act 2018 exemption schedules, ministerial orders and Customs guidance.
In this blog, we discuss how sales tax exemptions are determined today. We also cover how exempt goods, exempt persons, conditional exemptions and service tax treatment differ. We set out the evidence a registered business should keep. We also cover when to seek written confirmation from the Royal Malaysian Customs Department (RMCD).
The '15 items' phrasing traces back to early coverage of the Sales and Services Tax (SST). It emerged after SST's re-entry on 1 September 2018. The tax replaced the earlier Goods and Services Tax (GST) regime. Businesses transitioning from GST to SST in Malaysia rebuilt invoicing and filing processes almost overnight. A list compiled when the tax returned has since been overtaken by amendments, budget measures and rate changes.
For an SST-registered business, the practical risk is misclassification. Treating a taxable product as exempt understates the tax due. Taxing an exempt item overcharges customers and distorts margins. Both errors surface at a Customs review, when penalties have already accrued.
This guide fully updates our original post published on August 30, 2018.
Why Is a Fixed SST-Exempt List Not Enough?
The 2018 list is no longer a compliance reference. Current orders and RMCD guidance govern each exemption.
The items circulating in 2018 were lifted from the exemption instruments made under the Sales Tax Act 2018. Two orders matter most: the Sales Tax (Goods Exempted From Tax) Order 2018 and the Sales Tax (Persons Exempted From Payment Of Tax) Order 2018. Both have been amended repeatedly, and neither stops at fifteen entries.
The authoritative sources are direct. The Royal Malaysian Customs Department publishes the current orders, guides and circulars on its official website, while registrations and returns run through the MySST portal. Budget measures move rates and categories often — service tax rose from 6% to 8% for most services on 1 March 2024, with food and beverage kept at 6%. Last checked on 24 October 2026.
The reliable method is source-led. Identify the item's classification, read the current order that matches it, and record the instrument's name and date in the working papers. That is how we classify goods for clients before any exemption touches an invoice.
What Are the Four Types of SST Exemption?
SST uses separate sales tax orders for exempt goods, exempt persons and exemption from registration, while service tax has its own rules and exemptions under the Service Tax Act 2018.
The four buckets behave differently at review, so mixing them is the fastest route to a compliance error. Our resource on goods and persons exempted from sales tax expands on the first two categories in depth. The summaries below show where each distinction matters most.
Which Goods Can Be Exempt Under the Current Sales Tax Order?
Goods are exempt only where their tariff classification and description match the current exemption schedule. The current principal instrument is the Sales Tax (Goods Exempted From Sales Tax) Order 2025, read with its amendments, including the Sales Tax (Goods Exempted From Sales Tax) (Amendment) Order 2026, which took effect on 1 August 2026.
Start by confirming the Harmonized System tariff code. Then compare both the code and the exact description with the current schedule. Do not infer an exemption from a product's commercial name, intended customer or a similar item on an old list.
Who Can Obtain Sales Tax Relief Under the Persons Order?
The Sales Tax (Persons Exempted From Payment Of Tax) Order 2018, read with its current amendments, identifies the persons, acquisitions and conditions that may qualify for relief. Eligibility depends on the relevant schedule, the nature of the claim and any prescribed Customs process.
Person-based relief is not a general border exemption. Keep the approval, certificate or other evidence required by RMCD with the related invoices, declarations and supporting documents. A fixed list of consumer items does not replace the Persons Order or its conditions.
What Does Exemption From Sales Tax Registration Mean?
Exemption from registration can apply to manufacturing activities described in the Sales Tax (Exemption From Registration) Order 2018 and its amendments. It concerns whether a manufacturer must register for sales tax; it is not a blanket exemption for the manufacturer's goods.
Check the exact activity and current order before relying on this treatment. A business that is exempt from registration should not assume that all purchases, imports or supplies are exempt from sales tax.
How Does Service Tax Treatment Differ From Sales Tax Exemptions?
Service tax is separate from sales tax. Whether a service is taxable, exempt or subject to a particular rate depends on the Service Tax Act 2018, the Service Tax Regulations 2018, applicable orders and RMCD guidance.
The standard rate for taxable services is 8%. Food and beverage, telecommunications, parking, logistics, and rental or leasing services are charged at 6% under the Service Tax (Rate Of Tax) Order 2018, as amended.
If you are starting a coffee shop business in Malaysia, confirm the applicable food and beverage service-tax treatment and registration threshold before pricing or invoicing.
How Should Businesses Use an SST Exemption Category Map?
The table below maps each category to its governing instrument, its typical coverage and the one compliance point that matters most.
Use this map to identify the legal route that may apply, then verify the current RMCD order, schedule and amendment. It is a navigation tool, not a substitute for the legislation.
Common SST Exemption Categories in Malaysia
| Exemption category | Governing instrument | Typical coverage | Key compliance point |
|---|---|---|---|
| Exempt goods | Sales Tax (Goods Exempted from Sales Tax) Order 2025, as amended | Essentials and selected staples such as rice, flour and cooking oil | Match the item's classification to the current order before invoicing or importing |
| Exempt persons | Sales Tax (Persons Exempted From Payment Of Tax) Order 2018, as amended | Government bodies, statutory authorities, diplomats and approved persons | Relief is claimed through the prescribed Customs process, not assumed at the border |
| Conditional exemptions | Sector-specific orders under the Sales Tax Act 2018 | Approved strategic activities, projects and prescribed goods subject to conditions | Conditions on approved status, use and reporting must be met and documented |
| Service tax treatment | Service Tax Act 2018, its regulations and rate orders | Registered services at 8%, with food and beverage services at 6% | A goods exemption does not flow through to any taxable service |
What Evidence Should an SST-Registered Business Keep?
Five records matter: the current order text, exemption certificates or approvals, invoices and declarations, usage records for conditional relief, and written RMCD confirmations.
An exemption is only as strong as the paper behind it. At a Customs review, prove that the exemption applied and all conditions were met. Records created at the time are decisive.
Under both 2018 Acts, preserve relevant records for seven years from the latest date they relate to. Structure files to survive staff changes.
Marketplace sellers carrying SST-inclusive payouts have an extra reconciliation step. Our Malaysia E-Commerce Accounting: A Month-End Marketplace Payout Reconciliation Guide (2026) covers it month by month.
Evidence to Retain for SST Exemptions
| Evidence | Why it matters | Practical tip |
|---|---|---|
| Current order text | Amended orders make outdated copies unreliable | Refresh the file after each budget announcement |
| Exemption certificates and approval letters | Conditional and exempt-person claims need proof at review | File them with the related declarations and invoices |
| Purchase invoices and import declarations | Shows where sales tax was or was not charged | Match each document to the classification used |
| Usage and progress records | Conditional relief depends on conditions being met | Update records while the activity is still running |
| RMCD confirmations and rulings | Written confirmation shortens any later dispute | Keep the full correspondence chain, not only the reply |
Which SST Misconceptions Catch Businesses Out?
The costliest beliefs are that the 2018 list of 15 items still governs, that goods exemptions cover services, and that exemption applies automatically at the border.
The main risk is treating an exemption as a broad business status. Exemption is a rule that applies to a specific good, person or service. The table below addresses common mistakes that can lead to incorrect invoices, import declarations or SST returns.
Common SST Misconceptions vs the Reality
| Misconception | What the current framework says |
|---|---|
| The 2018 fifteen-item list is still current | That list was a snapshot; the orders behind it have been amended repeatedly since |
| A goods exemption also covers the service | Sales tax and service tax sit under separate Acts with separate exemption rules |
| Exemption applies automatically at import | Only goods whose tariff code and description match the current goods order are exempt; person-based relief needs approval and the prescribed Customs documentation |
| Registered treatment never changes | Rates, categories and conditions shift with budget measures — service tax moved to 8% in 2024 |
When Should an SST-Registered Business Seek Confirmation?
Seek RMCD guidance before invoicing when classification, eligibility or a conditional claim is unclear.
Seek clarification before invoicing, importing or claiming relief when the tariff classification, schedule entry, eligible person, condition or service-tax treatment is unclear.
RMCD can confirm tariff-code matters through its relevant channels. A business may also use the customs-ruling process for matters within the Sales Tax Act 2018, using the prescribed form and fee where applicable. Keep the application, supporting specifications and RMCD response with the related SST records.
We help clients organise product information, supporting documents and review-ready exemption files before a claim is made.
When to Seek Written RMCD Confirmation
| Situation | Why confirmation matters |
|---|---|
| A new product line or unclear classification | Classification decides whether an exemption order applies at all |
| Planning to rely on a conditional exemption | Conditions must be satisfied before the claim, not after |
| A rate or category change is announced | Transitional rules can affect open invoices and contracts |
| A past exemption claim is questioned | Written confirmation plus complete records shortens the dispute |
Conclusion
3E Accounting Malaysia is a Corporate Services Provider. We support local SMEs and multinational companies in Malaysia with SST registration, exemption reviews, record-keeping and MySST returns.
Our SST registration and bi-monthly filing support starts with the current orders. We classify product lists before an exemption is applied.
For import-side steps, our Malaysia SST Custom guide covers clearance and documentation. Foreign founders can begin with our Company Registration in Malaysia: Complete Guide For Foreigners.
This article is general information for 2026, not tax advice. Exemption orders can change, so confirm the current position with RMCD or a licensed tax adviser before applying an exemption.
Confirm Your SST Exemptions Before Your Next Filing
We review your product list against the current orders, prepare exemption submissions and manage MySST filings end to end.
Frequently Asked Questions
No. The figure came from 2018 press coverage. Current sales-tax exemptions depend on the Sales Tax (Goods Exempted From Sales Tax) Order 2025, its amendments and RMCD guidance, including the Sales Tax (Goods Exempted From Sales Tax) (Amendment) Order 2026. Person-based relief is assessed under the Sales Tax (Persons Exempted From Payment Of Tax) Order 2018 and its amendments.
Most taxable services are charged at 8%. Food and beverage, logistics, telecommunications and parking services remain at 6%. The 8% rate began on 1 March 2024. Confirm the current Service Tax (Rate of Tax) Order before invoicing, as rates and categories can change.
No. Sales tax and service tax sit under separate 2018 Acts with separate exemption rules, so each service must be assessed on its own under the Service Tax Act 2018.
SST records must be retained for seven years from the latest date to which they relate. Keep exemption certificates, invoices, declarations and proof that conditions were met.
When a classification, eligibility or conditional claim is unclear, seek RMCD guidance before invoicing. A customs ruling may be requested in the prescribed form and with the prescribed fee for matters within the Acts.
Abigail Yu
Director
Abigail Yu oversees executive leadership at 3E Accounting Group, leading operations, IT solutions, public relations, and digital marketing to drive business success. She holds an honors degree in Communication and New Media from the National University of Singapore and is highly skilled in crisis management, financial communication, and corporate communications.
