Malaysia has re-introduced Sales Tax and Service Tax (most commonly refer as SST 2.0), which has came into effect on 1 September 2018 in order to scrapping the 6% GST. Before the 6% GST (that was implemented in 2015), Malaysia levied a Sales Tax and a Service Tax (was referred as SST 1.0).
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.
Governed by the Sales Tax Act 2018, sales tax is a single stage tax levied and charged on all taxable goods manufactured in or imported into Malaysia. Sales tax is an ad valorem tax and different rates apply based on group of taxable goods and a specific rate for petroleum.
As for Service Tax Act 2018, service tax is a form of indirect single stage tax imposed on specified services termed as “taxable services” prescribed by the Minister under First Schedule of the Service Tax Regulations 2018. The service tax rate is fixed at 6% and a specific rate of RM25 per year on the principal and supplementary credit card or charge card.
The following taxable services are subject to the service tax:-
- Hotel (include lodging house, service apartment, homestay, Inn, rest house, boarding house)
- Insurance and Takaful
- Service of food and beverage preparation (include restaurant, cafe, catering, take-away, food truck, retail outlet, hawkers and etc)
- Club (include Night club, private club, golf club)
- Gaming (include Casino, game of chance, sweepstakes, gaming machines, lottery, betting)
- Forwarding agents
- Employment agency
- Management services
- Motor vehicle service or repair
- Hire and drive car
- Domestic flight except Rural Air Services
- Credit or charge card
- IT services
However, the service tax cannot be levied on any services that are not in the list of taxable service.
For more information and assistance, please feel free to contact our team members who are focused on helping individuals and businesses to manage the SST risk and our services include the following:-
- SST Registration
- SST Advisory
- SST Retainer Service
- SST Implications Review
- SST Training
- SST Appeal
- SST Customs Ruling Assistance