SST (Sales and Service Tax)

Sales and Service Tax (SST) is Malaysia's current indirect tax framework, reintroduced on 1 September 2018 to replace the Goods and Services Tax (GST) that had been in effect from April 2015. SST is administered by the Royal Malaysian Customs Department (RMCD) and comprises two separate taxes: Sales Tax on the manufacture and importation of taxable goods, and Service Tax on specified taxable services provided by prescribed businesses. Both taxes must be accurately reflected in e-invoices submitted through MyInvois.

Sales Tax is a single-stage tax levied at the manufacturer or importer level on taxable goods. The standard Sales Tax rate is 10%, though a reduced rate of 5% applies to certain goods (such as basic foodstuffs and some construction materials) and some goods are exempt entirely. Sales Tax registration is required for manufacturers or importers whose annual sales of taxable goods exceed RM500,000. Unlike GST, Sales Tax does not have an input tax credit mechanism — it is a cost that is absorbed or passed through the supply chain.

Service Tax is levied on specified taxable services at a standard rate of 8% (increased from 6% effective 1 March 2024 for most services, with the original 6% retained for certain categories such as telecommunications, logistics, and food and beverage services). Service Tax is chargeable by businesses registered for Service Tax whose annual turnover from taxable services exceeds RM500,000. Unlike Sales Tax, Service Tax is a final-stage tax charged to the end consumer of the service.

In e-invoices, SST information appears in specific UBL fields: the tax category code (Sales Tax, Service Tax, or exempt/zero-rated), the tax rate, the taxable amount, and the tax amount. The invoice must also include the supplier's SST registration number if applicable. LHDN's MyInvois system validates the SST fields against the registered tax status of the supplier — a business that is registered for Service Tax must correctly declare Service Tax on its service invoices, and discrepancies can trigger audit alerts.

A common point of confusion in Malaysian businesses is the interaction between LHDN's e-invoicing mandate and RMCD's SST requirements. While e-invoicing is administered by LHDN through MyInvois, SST itself is administered by RMCD through the MySST portal. Businesses with both obligations must ensure their invoices and SST returns are consistent — the SST amounts in their MyInvois-validated e-invoices should match the SST amounts declared in their periodic SST-02 returns to RMCD. Reconciliation between these two systems is a key compliance task.