SST for Small Businesses in Malaysia: Registration, Rates and Filing

You have crossed, or are about to cross, a sales figure that makes you wonder whether Sales and Service Tax (SST) now applies to your business. This guide explains who must register for SST in Malaysia, the current rates, what the 2024 and 2025 changes mean for small businesses, and how filing works. Figures are as at October 2026; confirm them with the Royal Malaysian Customs Department (RMCD) or a licensed tax agent before you act.

Sales tax and service tax are two different taxes

SST is not one tax but two, each with its own Act. Both took effect on 1 September 2018 when they replaced GST, and both are run by RMCD through the MySST portal.

• Sales tax is a single-stage tax on taxable goods that are manufactured in Malaysia or imported. It is charged once, at the manufacturer or import stage, and is not charged again when the goods are resold. Most rates are 5% or 10%. Essential goods such as chicken, fish, sugar, salt and bread, and basic building materials such as cement, stay at 0%.
• Service tax is charged on prescribed taxable services supplied by a registered business. The standard rate is 8%, with 6% kept for a short list of categories.

Who must register for sales tax

A manufacturer of taxable goods must register when the sales value of taxable goods exceeds RM500,000 in a 12-month period. Sub-contract manufacturers face the same RM500,000 test on the value of their sub-contract work. Manufacturers of non-taxable goods do not register at all. Small manufacturers below the threshold may register voluntarily.

Who must register for service tax

Service tax registration turns on two questions: is your service listed as a taxable service, and does your taxable turnover exceed the threshold for your group? RMCD applies two tests over any 12-month window. The historical method adds this month to the 11 months before it. The future method adds this month to the 11 months after it. You become liable on whichever date arrives first.

Only taxable services count towards the threshold. If a design studio earns RM400,000 from design work (a taxable professional service) and RM300,000 from reselling printed goods it buys in (not a taxable service), its taxable turnover is RM400,000 and it is still below the RM500,000 line.

The 2024 rate change

On 1 March 2024 the standard service tax rate rose from 6% to 8%. Food and beverage, telecommunications, parking and logistics kept the 6% rate, which is why a restaurant bill and an accountant’s invoice now carry different percentages (KPMG summary).

The 1 July 2025 scope expansion

On 9 June 2025 the Ministry of Finance announced a targeted revision of sales tax rates and an expansion of service tax to six new areas: leasing or rental, construction, financial services, private healthcare, education and beauty services. After public feedback, three amendments were made before the start date:

1. The threshold for rental and leasing, and for financial services, was raised from RM500,000 to RM1 million of annual sales.
2. Beauty services were dropped from the expansion altogether.
3. Imported apples, oranges, mandarin oranges and dates were exempted from sales tax.

Private education came in at 6%, but only for private schools charging more than RM60,000 a year per student and for higher education supplied to non-citizens. Malaysian citizens are not charged service tax on private healthcare or on higher education. The Ministry also announced that no prosecution or penalties would be imposed until 31 December 2025 on businesses that were taking steps to comply.

What changed again on 1 January 2026

Rental touches almost every shop, clinic and office, and two further changes took effect on 1 January 2026. The service tax rate on rental and leasing was cut from 8% to 6%, and the exemption for MSME tenants was widened: a business tenant with annual sales of up to RM1.5 million (previously RM1 million) is exempt from service tax on its rental. Rental of residential property remains outside the tax. The reduced rate was formalised by an amendment to the rate order gazetted in March 2026. If your landlord is still charging you 8%, or charging you at all when your sales are under RM1.5 million, ask for the invoice to be corrected.

How to check whether your services are taxable

1. Open the industry guides on MySST and find the group that matches what you actually do, not what your SSM business code says.
2. Split your revenue into taxable and non-taxable streams in your accounting software.
3. Run the historical and future 12-month tests at the end of every month, not once a year.
4. Check the exemptions for your group. Some business-to-business supplies of the same professional service are exempt, and the MSME rental exemption described above is another example.
5. If you are still unsure, ask RMCD or a licensed tax agent rather than guessing.

Registering through MySST

Registration is done online at the MySST portal (sst01.customs.gov.my). Choose the sales tax or service tax form, enter your SSM details, business activity, turnover and bank information, and upload the supporting documents. RMCD confirms the effective date in its approval. From that date you must show the tax as a separate line on every invoice and keep records for seven years.

Filing: the bi-monthly SST-02 return

Registered businesses file one SST-02 return for every two-month taxable period. The return and the payment are both due by the last day of the month after the period ends, and the return must be filed electronically through MySST even when no tax is payable. For example, the taxable period July to August 2026 must be filed and paid by 30 September 2026.

Late payment is expensive. The penalty is 10% of the unpaid tax for the first 30 days, a further 15% for the next 30 days, and a further 15% for the 30 days after that, up to a maximum of 40%.

Worked example

A Shah Alam consultancy registered for service tax bills RM60,000 of consulting fees in July and August 2026. Service tax at 8% is RM4,800, so its invoices total RM64,800. The RM4,800 belongs to the Government, not to the business. On or before 30 September 2026 the firm files its SST-02 and pays RM4,800. If it pays on 20 November 2026 instead, 51 days late, it owes RM4,800 plus 25% (10% for the first 30 days and 15% for the next 30), which is RM6,000.

Common mistakes by sector

Food and beverage. Using the RM500,000 threshold instead of RM1,500,000, forgetting that delivery-app sales count, charging 8% instead of 6%, and not noticing when a second outlet under the same company pushes the total over the line.

Retail. Assuming a reseller must register for sales tax. It does not, because the tax was paid upstream, unless it manufactures or imports. Not checking whether the landlord’s rental invoice applies the MSME exemption.

Services. Counting non-taxable income towards the threshold, missing the future test when a large contract is signed, and treating collected service tax as revenue and spending it before the due date.

Everyone. Forgetting nil returns, which are compulsory, and not updating MySST when the address, bank account or directors change.

Budget 2027: what did not change

Budget 2027, tabled on 9 October 2026, did not propose any general change to SST rates or registration thresholds. Its SST measures are narrow: an improved service tax treatment for elderly care services and a sales tax refund facility for traders who supply certain goods to manufacturers, both proposed to start on 1 January 2027 (Budget 2027 tax measures).

Key takeaways

• Sales tax is for manufacturers and importers of taxable goods with sales above RM500,000 in 12 months. A reseller does not register, because the tax was paid upstream.
• Service tax thresholds depend on your group: RM500,000 for most professional and business services at 8%, and RM1,500,000 for food and beverage at 6%.
• Run the historical and future 12-month tests at the end of every month, counting only taxable services.
• File the SST-02 return and pay by the last day of the month after each two-month period, even when nothing is due. Late payment penalties climb to 40%.
• Since 1 January 2026, rental is taxed at 6% and business tenants with annual sales of up to RM1.5 million are exempt. Check your landlord’s invoice.

How Gusto Style can help

Our fixed-price Business Health Check reviews your revenue streams, pricing, invoicing and record keeping, and flags whether you are approaching an SST threshold before RMCD does. We also check that SST is built correctly into your margins and cash flow. Gusto Style is a business consultancy, not a tax agent, so for registration, rulings and filing we refer clients to licensed tax agents and work alongside them.