Sales and Service Tax (commonly known as SST) is the new tax in Malaysia that was implemented on 1 September 2018. It replaced the Goods and Services Tax (GST), which was levied as the sole revenue collection mechanism in Malaysia.
Although SST is different from GST in various aspects, there are still numerous similarities between these two. However, the number of products or goods exempted via sales and services tax is more than those that were exempted through the GST.
With a view to assist you to learn more about the sales and services tax, we have compiled this comprehensive guide. It will help you to understand how SST works, how to register, and some other essential aspects associated with the sales and services tax.
What is SST Rate in Malaysia?
Following are the SST Malaysia rates applicable to different goods and services
|Rate||Type||Which goods or services|
|10%||Standard||The goods are charged with SST throughout the process or chain of B2B. This kind of tax isn’t deductible by the taxpayer.|
|6%||Standard||The sales and service tax is also applicable on the services. It is only due when the services are offered to the non-tax registered final consumer. These services include hotels and accommodation, restaurants, car repair & rental services, insurance, domestic flights, credit cards, business consulting, legal/accounting services, telecoms, electricity.|
|5%||Reduced||SST Malaysia rates are less for goods like petroleum oils, construction materials, telecommunications, foodstuffs, IT, and printing materials and hardware.|
Who Pays SST in Malaysia?
The local or international businesses performing their activities in Malaysia are bound to pay SST if they exceed a specific annual income threshold. At present, this threshold is set at a figure of RM500,000.
Businesses already registered with the GST don’t need to register again for the sales and services tax. This is so, as their data will be transferred to create the SST Malaysia registration. The overall process of registration is simple as it is an online procedure.
If you are confused about how and where these tax rules will be applied, don’t worry! We, as a top audit firm in Kuala Lumpur, can provide you best taxation advisory services for GST and SST in Malaysia.
What does SST stand for?
SST is an abbreviated term for “Sales and Services Tax”, which is a new tax collection system introduced in Malaysia. It’s a single-stage tax that is levied on all types of taxable goods being manufactured and sold within the country.
If the products or goods are taxable, SST is levied on them irrespective of whether a Malaysian registered manufacturer has manufactured these goods or has been imported.
However, there are various products or goods exempted from sales and service tax. These goods are listed in the “Sales Tax Exemption Order”.
How Can I Apply for SST in Malaysia?
Business owners can apply for SST Malaysia registration through an online portal named MySST. The prevailing businesses that are registered under GST would be automatically registered under SST.
Such business owners will receive a letter/email from the concerned authorities, notifying them that they are now liable to pay tax under the sales and services tax system. The SST Malaysia registration or application process is carried out online via MySST system.
The application made through this system is auto-approved for GST registrants (within 24 hours). Nevertheless, if the system requires some sort of verification, completing the registration process may take longer than normal.
Even if a business is exempted from the SST, it can apply for voluntary registration. Such a business should be manufacturing taxable goods, and its annual income should stay below the taxable income threshold.
How to Calculate SST Malaysia
Businesses must submit the returns through the online portal of MySST. This is essential as through this mechanism, they can easily provide the essential details. Once all the information is provided, the system will offer you the payable tax amount. Once you have calculated the number of sales and service tax, you can pay it via two different methods, online (FPX system) or through a cheque.
How to Pay SST Malaysia?
All the payments associated with the sales and services tax can be electronically paid via MySST Financial Process Exchange (FPX) system. On the other hand, you can pay it manually through a cheque.
The online tax payment mechanism allows the payment of a limited amount. The online payment limit for a corporate account is RM100 million. However, the limit for individual account payment is restricted to RM100,000.
Why SST is better than GST in Malaysia?
The decision of the Malaysian government to introduce the sales and service tax is beneficial in many ways. It would result in a much higher disposable income. This will mainly happen due to the lower prices of goods and services.
The consumers will be allowed to choose the products depending on their consumption and pay the service taxes depending on their affordability. The GST used to cover a wider sector and included almost every business.
Although GST helped the Malaysian government to collect RM44bil for the country, this type of tax wasn’t people-friendly in many ways. The scope of SST is relatively narrower, which suggests it could only provide RM23bil in the form of annual tax collection.
However, the best part of SST relates to its ability to offer considerable relief to the people. To draw a clear comparison between GST and SST, just look at the chart below.
|Comparison Chart- GST VS SST|
|Fields of Comparison||GST||SST|
|Purpose||A type of multi-stage and value-added tax||The single-stage tax imposed only on the output stage|
|Pricing||The price of a product or service is inclusive of GST||SST not included in the price. It works as an add-on besides the selling price|
|Rates||6%||Variable rates: The sales tax rates are dependant on the specific categories of services and goods|
Who is Eligible for SST Malaysia?
Before applying for the SST, every business performing its activities in Malaysia must assess whether they are subject to this tax. The GST-registered manufacturers, businesses, and service providers are automatically identified and registered under the SST.
Such businesses can charge sales and services tax to their relevant customers. The accounting partner or firm should advise the business if it has failed to register with the SST automatically. In this way, the business can register itself via the MySST system.
Usually, a business or service provider working under the Service Tax Act 2018 must register with the SST if the annual value of taxable services exceeds RM500,000. The SST threshold for restaurants, cafes, canteens, bars, or any other place that offers customers something to drink or eat is RM1,500,000.
The rate for service tax is 6% (fixed), and the services that fall under the ambit of SST include hotels, employment agencies, legal, gaming, insurance, parking, couriers, and advertising/accounting services.
The sales tax is applicable to both the manufacturing and import of goods. If the sales value of a company exceeds RM500,000 within 12 months, such a business would be liable to pay the SST. The sales tax rate levied on different products/goods ranges from 5% to 10%.
Some of the SST-exempted businesses and service providers include jewelers, tailoring, and opticians.
When did Malaysia get SST?
On 1 June 2018, GST was set at zero by the Malaysian government. It was replaced by a more robust and people-friendly tax collection system on 1 September 2018, which is referred to as the sales and service tax (SST). The Royal Malaysian Customs Department (RMCD) administers this type of tax.
Is SST Claimable in Malaysia?
Previously, businesses were allowed to recover or claim the GST. However, the business can’t recover the SST that was charged on B2B supplies. This would result in creating a compounding of the tax via the goods and supply chain provided between the companies.
When it comes to the SST on services, it is charged when these services are obtained. Therefore, the business offering services to its customers won’t face any recoverability issues.
On the other hand, exports are rendered as zero-rated when dealing with SST. The exporters could reclaim SST if they fall under or suffer specific circumstances.
How do I find my SST Number?
The processing of checking whether your business is registered with the SST is quite simple. You just need to take into account the following steps.
Step 1: To start with, you need to visit its official website by entering the address in the search bar of your browser (https://www.mysst.customs.gov.my/). Just click on the “Registration Status” tab, which will open a new page.
Step 2: Now click on the “please select” button. By doing so, you will be provided with different options. Just choose the “Name of Business” option.
Step 3: Simply provide or enter the name of your business and hit the submit button.
Through these steps, you can easily find your SST Number if you are already registered with the SST through the MySST web portal.
The major purpose of this comprehensive guide was to provide you with authentic information about sales and services tax that too in an easy-to-digest way. We hope that you find this piece of writing helpful to meet all your SST related issues.