Master Sales and Service Tax (SST) Malaysia with YYC taxPOD: Stay Compliant, Stay Ahead

Understanding and complying with Malaysia’s Sales and Service Tax (SST) is crucial for any business looking to operate smoothly in 2024. At YYC taxPOD, we equip businesses with the knowledge and tools necessary to navigate the complexities of SST, from registration to filing and penalty. This guide provides everything you need to know about SST, including the latest rates, exemptions, penalties, and more.

What is SST in Malaysia (SST是什么)?

SST, or Sales and Service Tax, is a single-stage consumption tax imposed in Malaysia, replacing the former Goods and Services Tax (GST) on 1 September 2018. SST comprises two main components:

1. Sales Tax: Applied to goods manufactured locally or imported into Malaysia.
2. Service Tax: Levied on specific services provided within the country.

While SST is borne by consumers, businesses act as intermediaries responsible for collecting and remitting the tax to the government. SST applies either at the time of importation or at the time the goods are sold by the manufacturer (for goods) or at the point of service consumption.

What are the Rates for SST in Malaysia?

Malaysia’s SST regime has different rates depending on the goods or services provided:

• Sales Tax at 5%: Applies to food  items such as butter, cheese, honey, and etc. 
• Sales Tax at 10%: The standard rate, usually levied on taxable goods, including mineral water, shampoo, detergent, and etc. 
• Service Tax at 8%: New in 2024, the service tax has increased from 6% to 8%, applicable to all services except food & beverage, telecommunication, parking, and logistics.
• Service Tax at 6%: Applies to food & beverage services, telecommunication services, parking services, and logistics.
• Exempted: Some goods and services are exempted from tax. 

Understanding the correct rate applicable to your business ensures compliance and avoids costly penalties.

SST Registration Requirements

Businesses must register for SST if they meet the following conditions:

• Sales Tax Registration:
  • Engaged in manufacturing taxable goods.
  • Total sales exceed or will exceed the threshold of RM 500,000
• Service Tax Registration:
  • Engaged in providing taxable services.
  • Total sales exceed or will exceed the threshold of RM 500,000 some services may have different thresholds).

The deadline for registration is  not later than last day of the following month after exceeding the threshold. Registration can be done via the MySST portal.

Exemptions Under SST

Certain goods are exempt from sales tax, particularly those meant for export, reflecting Malaysia’s support for export-driven industries. Other exemptions include:

• Foods (e.g., egg, chicken meat),
• Printed materials (e.g., drawing books),
• Essential oil 
• Contact lenses.

These exemptions help to promote education, healthy living, and economic activity in key sectors

Penalties for Non-Compliance to SST Malaysia

Failure to comply with SST obligations can result in heavy penalties. Here’s what businesses need to know:

• Non-Submission of SST Returns:
  • A fine of up to RM 50,000,
  • Imprisonment for up to three years,
  • Or both.
• Non-Payment of SST Dues:
  • A fine up to RM 50,000,
  • Imprisonment for up to three years,
  • Or both.
• Late Payment Penalties: Penalties increase based on the duration of the delay:
  • 1-30 days late: 10% penalty,
  • 31-60 days late: Additional 15% penalty,
  • 61-90 days late: Additional 15% penalty,
  • 91+ days: Maximum penalty of 40%.

GST vs SST | How is SST Different from GST?

While Goods and Services Tax (GST) was a multi-stage tax system applied at every stage of the supply chain, SST is a single-stage tax. Here’s a quick comparison:

Feature	SST (Active in 2024)	GST (Repealed)
Tax Structure	Single-stage (charged at point of sale)	Multi-stage (charged at each stage of supply)
Rates	Sales Tax: 5-10%, Service Tax: 6-8%	6% standard rate
Scope	Narrower, fewer items taxed	Broader, applied to most goods and services
Repealed/Active	Active (since 2018)	Repealed in June 2018

While GST was repealed, there are ongoing debates on its potential reintroduction in the future, given its ability to generate higher revenue for the government.

SST Calculation: How to Compute Your Tax Liability

The SST is computed based on the sales value of taxable goods or services. For sales tax:

• Sales Tax = Sales Value x Sales Tax Rate (5% or 10%).

For service tax:

• Service Tax = Service Value x Service Tax Rate (6% or 8%).

For businesses, accurate SST filing is crucial to avoid errors and penalties.

Learn Simplified SST Registration Process

Registering for SST is straightforward and can be done online via the MySST portal:

1. Visit: www.mysst.customs.gov.my.
2. Complete the registration form with your business details.
3. Upon submission, an approval letter is issued, and you’ll receive a registration number.
4. Ensure to keep track of your registration effective date and responsibilities.

Simplify SST Malaysia Compliance: Discover YYC taxPOD’s Expert Solutions!

At YYC taxPOD, we simplify SST compliance with:

• Step-by-step guides: From SST registration to filing and payment.
• Video tutorials and webinars to explain SST in simple terms.
• Expert consultation for complex SST issues.
• Bilingual resources: Available in both English and Mandarin.

YYC taxPOD: Your Partner for Smooth SST Compliance in Malaysia!

Staying compliant with SST regulations is vital to running a successful business in Malaysia. Through YYC taxPOD, you gain access to comprehensive SST knowledge and expert guidance tailored to help you meet your tax obligations efficiently.

Start Your SST Journey Today: Subscribe YYC taxPOD and learn how to navigate SST regulations effortlessly. Don’t let the complexity of tax compliance slow you down—stay ahead with the right knowledge! Book a FREE Demo Now!

FAQs about SST Malaysia

1. What is SST Malaysia?

SST (Sales and Service Tax) is a single-stage tax system in Malaysia, imposed on taxable goods and services. It includes a Sales Tax on goods manufactured or imported and a Service Tax on specific services provided by businesses.

2. What are the current SST rates in Malaysia?

The SST rates vary depending on the type of goods or services:

• Sales Tax: 5% or 10% depending on the goods.
• Service Tax: Increased to 8% (from 6%) effective 1 March 2024 for most services, except for food & beverage, telecommunications, parking, and logistics, which remain at 6%.

3. Who is required to register for SST?

Businesses that meet the following criteria must register for SST:

• Sales Tax: Manufacturers of taxable goods with an annual turnover exceeding RM 500,000.
• Service Tax: Service providers with taxable services exceeding RM 500,000 in annual revenue (different threshold for certain services).

4. What is the difference between Sales Tax and Service Tax?

• Sales Tax: Levied on taxable goods manufactured or imported into Malaysia.
• Service Tax: Charged on specific services provided within Malaysia (e.g., restaurants, hotels, and professional services).

5. Are there any goods or services exempt from SST?

Yes, certain goods and services are exempt from SST. These include goods for export, essential goods like foodstuffs, medicines, books, and specific services like healthcare and education.

6. How is SST different from the former GST?

• SST is a single-stage tax imposed at the point of sale or service.
• GST (Goods and Services Tax) was a multi-stage tax applied at every stage of the supply chain but was repealed in 2018.
• SST generally has a narrower scope compared to GST.

7. How is SST calculated?

• Sales Tax is calculated based on the sales value of taxable goods. For example, if the Sales Tax rate is 10%, and the sales value is RM 1,000, the tax would be RM 100.
• Service Tax is similarly calculated on the service value. For instance, an 8% service tax on RM 1,000 in services would result in RM 80.

8. What happens if I don’t file or pay SST on time?

Businesses that fail to submit SST returns or pay SST dues on time face penalties:

• Non-submission of returns: Fines up to RM 50,000, imprisonment up to 3 years, or both.
• Late payment penalties: Range from 10% to 40% depending on the number of days of delay in payment.

9. What is the process for SST registration in Malaysia?

Registration for SST can be completed online through the MySST portal. Businesses need to fill out the necessary forms, provide accurate information, and submit them. Once approved, the business will receive a registration number and an approval letter.

10. What records should businesses maintain for SST compliance?

Businesses must maintain accurate and complete records of:

• Sales and service transactions,
• Invoices and receipts showing SST charges,
• SST returns and payments.

These records must be kept for at least 7 years as part of compliance requirements.

11. Can SST be re-claimed like GST?

No, unlike GST, SST is not a tax that allows input tax credits. This means businesses cannot claim back the SST paid on inputs, which can result in higher costs compared to GST.

12. Is there any talk of GST being reintroduced?

Yes, there have been discussions about the possibility of reintroducing GST in Malaysia, as it was seen as a more comprehensive revenue system. However, as of 2024, SST remains the current tax structure, and any future changes would require formal government announcements.