|Standard Rate||Reduced Rate||Other Rates|
Malaysia implemented a ”Sales tax and service tax (SST)” on September 1, 2018.
Sales tax. Sales tax is a single-stage tax, applied to sales of locally manufactured taxable goods as well as to taxable goods imported for domestic consumption.
Service tax. Service tax shall be charged and levied on any taxable services provided in Malaysia by a registered person in carrying on his business or self-assessed on any imported taxable services. It is applicable to specific taxable services prescribed under the First Schedule of the Service Tax Regulations 2018.
Sales tax is an ad valorem tax and different rates apply based on the customs classification (HS codes) of the taxable goods. It is, therefore, crucial that the correct HS code classification is assigned to each of the products to ensure accuracy of the sales tax rate being applied.
The term “taxable goods” refers to goods that are of locally manufactured, as well as imported goods, both of which that are not exempt under the sales tax law.
The local name for SST in Malyasia is Cukai jualan dan cukai perkhidmatan (CJP).
There are basically 2 SST rates in Malaysia:
- Standard SST rate is 10%
- Reduced SST rate is 5%
For more information about (recent) rate change developments in Malaysia, please click HERE.
Standard rate: 10%
This rate applies for all transactions that take place in Malaysia, unless an exception applies (such as a reduced rate, the zero rate or an exemption, or a reason to treat the transaction as outside scope of SST).
Reduced rate: 5%
- Nonessential goods (including among others, foodstuffs and building materials)
Zero rate (0%)
The term “exempt” refers to supplies of goods that are not liable to tax.
Nevertheless, the Minister of Finance has the power to exempt the following:
- Any goods or class of goods from the whole or any part of the sales tax, subject to conditions as he deems fit.
- Any person or class of persons from payment of the whole or any part of the sales tax that may be charged and levied on any taxable goods manufactured or imported.
Example of exempt supplies of goods
- Raw food (e.g., meat, vegetables, seafood)
- Bricks, blocks, tiles
- Bicycles and other cycles (including delivery tricycles), not motorized
- Trucks, motorcycles
A global VAT/GST rate overview can be found here (note this is a work in progress).
This post was last updated on August 19, 2021.