Royal Malaysian Customs Department has implemented a Sales and Service Tax (SST) since mid of 2018 to replace the previously active Good and Services Tax (GST) system. The SST consists of two sections mainly as following;
Service Tax: This is a tax levied and charged on all taxable services provided within Malaysian by a Company that is also a registered service provider. The current service tax is at 6% for all qualifying taxable services.
Sales Tax: A SST registered manufacturer selling goods locally or a company importing taxable goods into Malaysia will be subjected to this Sales Tax. Sales tax is a single-stage tax system. Current sales tax is at 5% for basic foodstuff, fruit juices, computers, mobile phones, and watches and 10% for all other goods except petroleum.
Relin Consultants article below discusses whether you Malaysian Sdn Bhd has to register for SST and what types of goods and services are subjected to SST. If you are unsure how to proceed, contact us for a non-obligatory consultation.
WHAT IS SST IN MALAYSIA?
Do you need to register for SST?
It is mandatory to register for SST if your limited liability company meets the following criteria.
Annual Turnover Criteria
Total Sales value of the taxable goods of your company exceeds RM 500,000 in the past 12 months. This is only applicable if your company is in the manufacturing industry
The total Sales value of your taxable services exceeds RM 500,000 in the past 12 months if you are a service provider of taxable services. There are limited exemptions available if you are an operator of a food and beverage chain with an annual turnover of less than RM 1.5 million.
However, a company can also choose to voluntarily register for SST even if the company does not meet the above requirements.
Taxable Goods and Services Criteria
- Taxable Goods: All imported goods into Malaysia or all goods manufactured in Malaysia. The general rule of SST law is that any goods not listed under the Sales Tax (Goods exempted from Sales Tax) Order 2018) is subject to Sales Tax.
- Taxable Services: SST will be applicable to all the services listed in the first schedule of the Service Tax Regulations 2018. The Malaysian government has divided the services into various groupings such as accommodation, food and beverage, night clubs and beer houses, golf clubs, betting and gaming, and professional services among others. There are also some exemptions available if your company meets certain criteria.
How To Register For SST And How To Manage SST Returns And Payments?
Registering for SST is relatively easy as you complete the registration online through the MYSST portal either by submitting the Sales Tax registration application or the Service Tax registration application.
Once your company is registered, the authority will notify you via email and an official letter to the registered address of the company. Thereafter you will be required to complete SST filing every 2 months once even if the company has no taxable revenue. The authorities will also notify you of your company’s first taxable period based on whether the company ‘s financial year-end falls on an odd or even month.
The recognition method for the sales and service tax is slightly different from the usual accounting treatment.
The Sales tax must be recognized when the taxable goods are disposed of/sold or once used by the taxable person.
The service tax must be recognized when payment is received for the taxable services rendered.
SST return filing
The most efficient way to file SST return will be online through the JCP System while there is an option to file SST manually by downloading the FORM SST-02 from the SST Portal. Relin Consultants highly encourages the online filing method.
Payment for SST
Payments for SST must be completed within 30 days from the end of the filing deadline. A company can choose to make payment through the JCP Systems online payment system if the amount is below RM 100 million. Alternatively, you may proceed with the payment by issuing a cheque by mail to CPC. Do not that the mail option of the cheque is highly discouraged as it often leads to late payment and penalty as the mails are often lost.
Penalties for Non-Compliance
|Failure or late registration of SST
|The company will need to bear the SST from the date qualifying date.
|Late filing or no filing of SST returns
|Fines of RM 50,000 or jail for a maximum of 3 years of both.
|Late SST payment penalty
10% of outstanding SST payable if paid within the first 30 days.
15% in addition to the above 10% of outstanding SST payable if paid within the second 30 days.
15% in addition to the above 10% and 15% of outstanding SST payable if paid after the third 30 days.