Published June 12, 2018 · Updated October 21, 2026
Between 1 April 2015 and 31 August 2018, almost every invoice in Malaysia carried a 6% Goods and Services Tax (GST). Since 1 September 2018, consumption tax has been collected instead through the narrower Sales and Service Tax (SST).
In this article, we compare GST and SST in Malaysia. We explain how each regime works, plus current rates, thresholds and filing duties. We also cover what the 2018 switch means for manufacturers, service providers and importers.
The GST vs SST Malaysia comparison still matters in 2026. Legacy GST records surface in due diligence and audits, while the live SST list of taxable services keeps expanding.
Mixing the two regimes up is expensive. GST taxed nearly every sale along the supply chain, whereas SST taxes selected goods once and service tax is generally due when payment is received. Businesses that misapply the rules risk wrong invoicing, missed registration deadlines and penalties from the Royal Malaysian Customs Department.
Why Did Malaysia Replace GST With SST?
GST ran from 1 April 2015 to 31 August 2018, and SST has run since 1 September 2018; public pressure over the cost of living drove the switch.
Malaysia taxed sales and services for decades before GST appeared. The old SST was narrow, so the government introduced GST on 1 April 2015 to widen the base, at a standard rate of 6%.
Registration was compulsory once annual taxable turnover exceeded RM500,000. GST then applied to nearly every supply of goods and services. Essentials and exports were zero-rated, and items such as financial services were exempt.
Businesses charged the tax, claimed credits for the input tax on their own purchases, and filed monthly returns. The credit mechanism kept GST neutral between businesses, but it put invoice-level compliance on every seller in the chain.
Public pressure over living costs ended the experiment. On 1 June 2018 the government zero-rated the GST system, and on 1 September 2018 the Customs Department reinstated SST under the Sales Tax Act 2018 and the Service Tax Act 2018.
How Does SST Work in Malaysia Today?
SST comprises two single-stage taxes. Sales tax applies to taxable goods at import or manufacture, while service tax applies to taxable services.
SST does not travel down the supply chain the way GST did. It is a pair of single-stage taxes, both administered by the Royal Malaysian Customs Department. Our Sales and Service Tax (SST) resource hub gathers the registration, exemption, rate and filing guides in one place.
The position set out below reflects the framework in force as at October 2026.
1. Sales Tax on Goods
Sales tax applies once, on taxable goods imported into Malaysia or on locally manufactured taxable goods when they are sold, used or otherwise disposed of by the manufacturer. The current Sales Tax (Rate of Sales Tax) Order 2025 fixes sales tax at 10% generally, 5% for First Schedule goods and specified rates for Second Schedule goods.
A broad exemption schedule keeps essentials such as basic foodstuffs outside the tax. A manufacturer must register once annual sales of taxable goods exceed RM500,000. Registered manufacturers must register under the Sales Tax Act 2018; any separate manufacturing-licence requirement depends on other applicable legislation.
2. Service Tax on Services
Service tax is added by registered providers on the taxable services listed by the Minister of Finance. The rate rose from 6% to 8% on 1 March 2024. Food and beverages, parking, logistics and telecommunications stayed at 6%, according to the MySST portal of the Royal Malaysian Customs Department.
The taxable-services list has grown in stages since 2018 through successive budget measures. Check the current schedule before invoicing, because the categories decide whether your service is caught.
3. Registration, Licensing and Filing
The sales-tax registration threshold remains RM500,000 for taxable manufacturers, while service-tax registration thresholds vary by prescribed service. Manufacturers of taxable goods must register when their 12-month sales value exceeds RM500,000, while importers pay sales tax on taxable goods at importation. Service providers must register when their taxable-service value exceeds the threshold prescribed for their service.
Registered persons file the SST-02 return every two months, by the last day of the month following the end of each taxable period. Payment is due with the return, which may be submitted through MySST or by the permitted manual methods, with payment made electronically or by cheque or bank draft.
Current SST Rates in Malaysia
| Tax | Rate | Scope and effective date |
|---|---|---|
| Sales tax | 10% | Standard rate on most taxable goods, in place since 1 September 2018 |
| Sales tax | 5% | Reduced rate on the limited list of goods in the Rates of Tax Order |
| Service tax | 8% | Most taxable services, in force since 1 March 2024 |
| Service tax | 6% | Food and beverages, parking, logistics and telecommunications since 1 March 2024; the general rate from 1 September 2018 to 29 February 2024 |
How Does the Switch Affect Your Business?
GST spread compliance across every seller in the chain, while SST concentrates it on manufacturers, importers and providers of taxable services.
The paperwork load dropped sharply in September 2018. GST demanded tax invoices, input-tax reconciliation and monthly returns from almost every business. SST instead concentrates compliance on manufacturers, importers and providers of taxable services, most of whom file only six returns a year.
The economics changed as well. GST credits made the tax broadly neutral between businesses. Under SST, a registered provider's 8% service tax usually cannot be recovered by the client. Sales tax embedded in imported inputs stays in the price unless an exemption scheme applies.
Consumers meet the tax less often, because SST touches fewer transactions than GST did. Exports largely sit outside service tax, and designated areas such as Labuan follow special rules. The narrower base generally softens the visible pricing burden, even at the higher headline rates.
How Do GST and SST Apply in Practice?
The clearest way to compare GST and SST is to run the same three businesses through both regimes:
- A manufacturer pays once, at first sale
- A registered service provider adds tax to its fees
- An importer settles the tax at the border
The examples below use the current rates and the RM500,000 registration thresholds confirmed above. Turnover figures are illustrative.
1. Manufacturer
A Penang furniture maker with RM3 million in annual sales is a taxable manufacturer. Under GST, it added 6% to every wholesale and retail invoice and credited the input tax on timber, glue and machinery.
Under SST, the same firm charges 10% sales tax as the taxable goods leave the factory. It holds a manufacturing licence and manages input costs through the exemption schemes open to approved manufacturers.
2. Service Provider
A Kuala Lumpur marketing consultancy billing RM800,000 a year now adds 8% service tax to its fees, because the service is taxable and turnover exceeds RM500,000.
A restaurant crossing the same threshold adds only 6%. Food and beverage services kept the old rate in the March 2024 increase, which is worth remembering when starting a coffee shop business in Malaysia.
3. Importer
An importer of electronic components paid 6% GST at the border under the old regime, then claimed the amount back as input tax. Today the same shipment attracts 10% sales tax at import, or 5% where the item sits on the reduced list.
Imported taxable services acquired for business use can also trigger service tax. Online sellers should keep marketplace settlements tidy as well; our Malaysia E-Commerce Accounting: A Month-End Marketplace Payout Reconciliation Guide (2026) explains the month-end process.
GST and SST in Malaysia: Side-by-Side Comparison
| Comparison point | GST (1 April 2015 to 31 August 2018) | SST (1 September 2018 to present) |
|---|---|---|
| Legal basis | Goods and Services Tax Act 2014 | Sales Tax Act 2018 and Service Tax Act 2018 |
| Administrator | Royal Malaysian Customs Department | Royal Malaysian Customs Department |
| Tax mechanism | Multi-stage tax on nearly every supply | Single-stage taxes: sales tax on goods, service tax on taxable services |
| Headline rates | 6% standard rate, 0% zero-rated supplies | Sales tax 10% or 5%; service tax 8%, with 6% for food and beverages, parking, logistics and telecommunications |
| Registration threshold | RM500,000 annual taxable turnover | RM500,000 annual sales of taxable goods for sales tax; RM500,000 taxable turnover for service tax |
| Input tax treatment | Full input tax credit across the supply chain | No general input credit; relief only through specific sales tax exemption schemes |
| Invoices | GST-compliant tax invoices mandatory | No prescribed SST invoice format; service tax shown on the bill where charged |
| Taxable persons | Nearly all suppliers of goods and services above the threshold | Manufacturers and importers of taxable goods; providers of taxable services |
| Filing cycle | Monthly return, due by the last day of the following month | Bi-monthly SST-02 return, due by the last day of the month following each taxable period |
| Business impact | Tax visible on every invoice, with broad pricing pressure | Narrower base, but service tax is usually an unrecoverable cost for business buyers |
Conclusion
The GST vs SST Malaysia comparison, updated for October 2026, comes down to one line. GST is closed history; SST is the operative framework.
GST ran at 6% from 1 April 2015, was zero-rated on 1 June 2018 and ended on 31 August 2018. SST applies today. Sales tax is 10% or 5% on taxable goods at import or manufacture. Service tax is 8% on most taxable services. A 6% rate remains for food and beverages, parking, logistics and telecommunications.
We help clients across Malaysia register for SST, hold the right licences, file SST-02 returns on time and close out legacy GST-era records. That work sits alongside incorporation, corporate secretarial and accounting support for startups, SMEs and multinational companies in Malaysia. The wider 3E Accounting network covers more than 110 countries.
This article was first published on June 12, 2018 and was last reviewed and updated on 21 October 2026. For further reading, see A Guide to EPF Withdrawals in Malaysia and What You Need to Know About Registering a Sdn Bhd Company in Malaysia.
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Frequently Asked Questions
No. GST at 6% applied from 1 April 2015, was zero-rated on 1 June 2018, and ended on 31 August 2018. SST replaced it from 1 September 2018.
Sales tax is 10% on most taxable goods and 5% on a limited list. Service tax has been 8% since 1 March 2024, except food and beverages, parking, logistics and telecommunications, which remain at 6%.
Manufacturers and importers of taxable goods with annual sales above RM500,000, and providers of taxable services whose annual taxable turnover crosses the general RM500,000 threshold.
No general input-tax credit exists under SST. Relief is limited to specific sales tax exemption schemes, so SST paid on inputs usually remains a cost.
Registered persons file the SST-02 return every two months, by the last day of the month following the end of each taxable period, through the MySST portal.
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.
