Understanding SST (Sales Tax and Services Tax)

What is Service Tax?

• Service tax that is a tax charged and levied on taxable services provided by any taxable person in Malaysia in the course and furtherance of business.
• Taxable person is any person who belongs in Malaysia and is prescribed to be a taxable person.
• Taxable service is any service which prescribed to be a taxable service.

Sales and Service Tax (SST) in Malaysia

The Ministry of Finance (MoF) announced that Sales and Service Tax (SST) will come into effect in Malaysia on 1 September 2018.


The move of scrapping the 6% GST has paved the way for the re-introduction of SST, which will come into effect in 1 September 2018. Before the 6% GST (that was implemented in 2015), Malaysia levied a Sales Tax and a Service Tax. Governed by the Sales Tax Act 2018 and the Service Tax Act 2018, the Sales Tax was a federal consumption tax imposed on a wide variety of goods while the Service Tax was levied on customers who consumed certain taxable services. Special designated areas that include Langkawi Island, Tioman Island and Labuan Island are exempted from the Service Tax. This page will help you to understand what SST is and how it will affect us.

Transitional from GST to SST

When the GST Act 2014 is repealed, you are automatically ceased to be a GST registered person. You are not required to apply for deregistration. However, you are required to submit the final GST return within 120 days fro the Act being repealed.

GST vs SST. Which is better?

MALAYSIA’s decision to revert to the Sales and Service Tax (SST) from the Goods and Services Tax (GST) will result in a higher disposable income due to relatively lower prices it will incur in most goods and services.

Consumers will have a choice in their consumption – by paying service taxes based on their affordability and ability.

The coverage of GST was comprehensive and it covered too wide a sector. While it was able collect a sustainable sum of RM44bil for the country, it was not people-friendly.

The narrowing scope of the SST will at most, collect approximately RM23bil for the country but it will indeed relieve the people – so SST is needed by the people.

Methodology of SST

The Sales Tax Bill and the Service Tax Bill have just been passed at the Dewan Rakyat and are expected to get approval from the Dewan Negara when it convenes on August 20.

This leaves little room for businesses and entrepreneurs to get ready for the new tax regime in less than a month’s time.

image: https://www.thestar.com.my/~/media/online/2018/08/11/18/52/mainx_ahs_1108_compare-gst-sstpdf.ashx?la=en

Therefore, it is of utmost importance to understand the concept and mechanism of SST as stated in both the Bills.

SST comprises two legislations. The sales tax is imposed on the manufacturing sector as governed by the Sales Tax Act 2018 while service tax is imposed on selected service sectors, with one of the most notable ones being the food and beverage (F&B) service providers.