What Are The Imported Services & Imported Taxable Services?
Effective 1 January 2019, any business in Malaysia that acquires taxable services from a service provider outside Malaysia is subject to imported service tax. Malaysia’s obligations under Section 2 of the Service Tax Act 2018. This requirement applies regardless of whether the acquiring entity is registered under the Sales and Service Tax (SST) framework.
The Malaysia imported service tax mechanism operates on a self-accounting basis. The recipient of the service, not the foreign provider, is responsible for calculating, declaring, and remitting the applicable tax to the Royal Malaysian Customs Department (RMCD).
As at 1 March 2024, the standard rate of service tax on most imported taxable services increased from 6% to 8%, pursuant to the Service Tax (Rate of Tax) (Amendment) Order 2024.
Businesses must ensure their compliance posture reflects this updated rate. The official imported service tax guideline and all related RMCD service tax guides are accessible via the MySST Portal.
Malaysia Imported Service Tax
| Parameter | Detail |
| Effective Date | 1 January 2019 |
| Governing Law | Service Tax Act 2018 (Sections 2, 26, 26A) |
| Standard Rate | 8% (effective 1 March 2024) |
| Applicable Rate (F&B, Telecom, Logistics, Parking) | 6% |
| Digital Services by FRP | 8% (effective 1 March 2024) |
| Who Is Liable | All businesses in Malaysia acquiring taxable services from overseas |
| Filing Form (SST Registrant) | SST-02 |
| Filing Form (Non-Registrant) | SST-02A |
| Record Retention Period | 7 years |
| Administered By | Royal Malaysian Customs Department (RMCD) |
| Official Portal | mysst.customs.gov.my |
What Is an Imported Taxable Service?
Under Section 2 of the Service Tax Act 2018, an “imported taxable service” is defined as any taxable service acquired by any person in Malaysia from any person who is outside Malaysia, for the purpose of conducting business in Malaysia.
The term imported services tax in Malaysia is commonly used to describe this category. In practice, taxable imported services are those prescribed under the First Schedule of the Service Tax Regulations 2018 and typically include:
- Group G – Professional Services: Legal, accounting, auditing, engineering, architectural, consultancy, training, coaching, and management services
- Group I – Other Prescribed Services: Advertising services (Item 8), brokering and guaranteeing services for non-financial services (Item 12, effective 1 March 2024)
- Group J – Logistics Services: Logistics and related services (effective 1 March 2024, taxed at 6%)
- IT and Digital Services: Software, data hosting, and IT-related professional services from overseas vendors
Both SST-registered businesses and non-registered businesses conducting commercial activities are equally obligated to account for imported service tax in Malaysia on qualifying acquisitions.
WHO MUST ACCOUNT FOR IMPORTED SERVICE TAX?
The obligation to self-account for imported service tax in Malaysia falls on the business entity that acquires the service, not the overseas service provider. Two categories of business entities are subject to different compliance procedures:
1. SST-Registered Persons
A registered person under the Service Tax Act 2018 is required to:
- Account for service tax on imported taxable services in the SST-02 Return, declared separately under Section B1
- Submit the return and remit payment no later than the last day of the month following the end of the taxable period (every 2 months)
2. Non-SST-Registered Persons
A business that is not registered under SST but carries on commercial activities and acquires imported taxable services must:
- Account for and pay service tax via Form SST-02A
- Submit and remit payment no later than the last day of the month following the month in which payment was made or invoice received, whichever is earlier
The obligation to self-account applies from the moment a qualifying imported service is acquired for business purposes, irrespective of SST registration status.
How Does an SST Registrant File and Pay Service Tax on Imported Services in Malaysia?
In accordance with Section 26 of the Service Tax Act 2018, the SST registrant needs to pledge tax on imported taxable services in Form SST-02. The value of imported taxable services shall be declared separately in section B1 of Form SST-02.
The Form SST-02 needs to be submitted, and the payment needs to be made not later than the last day of the month following the end of the taxable period.
How Does a Non-SST Registrant File and Pay Service Tax on Imported Services in Malaysia?
In accordance with Section 26A of the Service Tax Act 2018, the non SST registrant needs to pledge tax on imported taxable services in Form SST-02A.
The Form SST-02A needs to be submitted, and the payment needs to be made not later than the last day of the month following the end of the month in which the payment on the service has been made by him or the invoice is received by him.
What Are the Late Payment Penalties for Service Tax on Imported Services in Malaysia?
Delay of payment for service tax by any person from the due date will result in the penalty being imposed as follows: –
| Number of Late Days | Penalty Rate |
| First 30 Days | 10% |
| Next 30 Days | 15% |
| 30 Days Thereafter | 15% |
What Are the Responsibilities of a Non-SST Registrant in Malaysia?
In accordance with Section 24 (5A) of the Service Tax Act 2018, it is compulsory for non SST registrant who is conducting its business and obtaining imported taxable services to keep a record of all associated transactions. All records shall be kept and maintained for a period of seven (7) years, and it must be kept in Malaysia. These records should be kept in either Bahasa Malaysia or English.
What Are The Exemptions from Imported Service Tax?
The imported service tax guideline issued by the RMCD prescribes specific circumstances under which a business is relieved from self-accounting for imported service tax. Three key exemption categories apply:
Exemption 1: Intra-Group Relief
Where a Malaysian company acquires prescribed Group G – Professional Services (excluding employment services and private agency services) from a company within the same group of companies outside Malaysia, such acquisition is not classified as an imported taxable service and is therefore not subject to service tax.
Qualifying Group G Sub-Items (as prescribed under First Schedule): Items (a) through (i) covering legal, accounting, auditing, engineering, architectural, consultancy, technical, management, and scientific services
Exemption 2: B2B Exemption (Business-to-Business)
Effective 1 January 2019, a registered person acquiring the following services from another SST-registered person providing the same category of service is exempt from paying service tax on that acquisition:
- Professional services under Group G (excluding employment and private agency services)
- Advertising services under Group I, Item 8
The service recipient must be a registered person under the Service Tax Act 2018, and must themselves be providing services under the same item of the First Schedule.
Exemption 3: Services Related to Goods or Land Outside Malaysia
Imported taxable services that relate to:
- Goods situated outside Malaysia
- Land or property situated outside Malaysia
- Matters occurring wholly outside Malaysia
They are not subject to malaysia imported service tax, as the subject matter of the service falls outside the Malaysian tax jurisdiction.
Note: The B2B exemption and the intra-group relief are separate mechanisms. The intra-group concession applies to the same-group scenario under Group G; the B2B exemption applies to arms-length transactions between two separately registered taxable persons.
What Is The Service Tax on Digital Services by Foreign Registered Persons (FRP)?
Effective 1 January 2020, digital services provided to Malaysian consumers by Foreign Registered Persons (FRP) are subject to service tax charged directly by the foreign provider, at the rate of 8% (effective 1 March 2024).
A foreign digital service provider is liable to register with the RMCD under the SToDS (Service Tax on Digital Services) framework when the total value of digital services provided to Malaysian consumers exceeds RM500,000 in any 12-month period.
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Impact on Malaysian Businesses
Where a Malaysian business has already paid service tax on digital services to an FRP, it is not required to self-account under the imported taxable service mechanism, preventing double taxation. However, digital services acquired from a non-registered foreign provider must be self-accounted and remitted through SST-02 or SST-02A, where applicable.
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Refund Mechanism
A local SST-registered person who is charged service tax on digital services by an FRP, and who is providing the same digital services themselves, may be eligible to apply for a refund or offset of the service tax paid to the FRP, subject to RMCD conditions.
WHEN IS IMPORTED SERVICE TAX DUE?
Service tax on imported taxable services becomes due and payable at whichever of the following occurs first:
- The date on which payment is made for the imported service; or
- The date on which an invoice is received for the imported service
This trigger applies to both SST-registered persons (filing under SST-02) and non-registered businesses (filing under SST-02A).
Filing Deadlines
| Entity Type | Filing Form | Deadline |
| SST-Registered Person | SST-02 | Last day of the month following the end of the 2-month taxable period |
| Non-Registered Business | SST-02A | Last day of the month following the month of payment or invoice receipt |
All returns and payments are submitted online via the MySST Portal using the FPX payment system.
What Are the Requirements for Imported Service Tax in Malaysia?
Pursuant to Section 24(5A) of the Service Tax Act 2018, all businesses, whether SST-registered or not, that acquire imported taxable services are mandated to maintain comprehensive records of all related transactions. The statutory requirements are:
- Retention Period: A minimum of 7 years from the date of the transaction
- Location: Records must be kept within Malaysia
- Language: Records must be maintained in Bahasa Malaysia or English
Records should include invoices from overseas service providers, proof of payment, and any correspondence relevant to the nature of the services acquired.
How Can Businesses Navigate Imported Service Tax Compliance in Malaysia?
Malaysia’s imported service tax framework continues to evolve from the rate adjustment to 8% in March 2024 to the expansion of taxable service categories and the inclusion of financial services in July 2025. For businesses regularly acquiring professional, digital, or technical services from overseas vendors, the compliance obligations are both ongoing and consequential.
3E Accounting provides specialised advisory and compliance services across the full spectrum of Malaysia’s Sales and Service Tax obligations, including imported service tax assessment, SST registration, return filing, and exemption analysis.
Our professionals combine technical expertise with practical insight to ensure your business remains fully compliant with RMCD requirements and strategically positioned to leverage available exemptions.