Malaysia reinstated the Sales and Service Tax (SST) in September 2018 after abolishing GST. In 2024, service tax was raised from 6% to 8% on most services. Here is a complete guide to SST in Malaysia โ who pays it, what is taxed, and how it affects you.
SST Rates in Malaysia 2026
| Tax Type | Rate | What It Applies To |
|---|---|---|
| Sales Tax (manufactured goods) | 5% | Selected categories (food, beverages) |
| Sales Tax (other goods) | 10% | Most manufactured goods above threshold |
| Service Tax (most services) | 8% | Restaurants, hotels, telecom, professional services |
| Service Tax (logistics, insurance) | 6% | Certain specified services |
| Digital Services Tax (foreign) | 8% | Netflix, Spotify, foreign digital services |
SST-Exempt Items
Common exemptions: basic groceries (rice, flour, cooking oil, vegetables, meat, fish, eggs), prescription drugs, agricultural equipment, educational services (private schools, tuition), public transport, financial services, residential property rental.
Service Tax Registration Threshold
Businesses providing taxable services must register for service tax when annual taxable turnover exceeds RM500,000. Once registered, they must charge 8% on all taxable services and remit to Customs quarterly.
Impact on Consumers
The service tax increase from 6% to 8% in 2024 effectively raised prices for restaurant meals, hotel stays, professional services, and telecom bills by approximately 1.9% on the service component. For a monthly restaurant spend of RM800, this adds approximately RM15/month in additional service tax.
Our editorial team specialises in Malaysian personal finance โ covering loans, taxation, insurance, EPF, and Islamic finance. Every article is fact-checked against Bank Negara Malaysia (BNM), LHDN, and major Malaysian bank publications. We reference our calculators (which use industry-standard formulas) to ensure consistency between our written content and tools. Learn more about our methodology โ