Background

Sales tax is a tax charged and levied:-

  • on taxable goods manufactured in Malaysia by a taxable person and sold, used or disposed by him;
  • on taxable goods imported into Malaysia.

Sales tax is not charged on:-

  • goods listed under Proposed Sales Tax (Goods Exempted From Sales Tax) Order;
    • Certain manufacturing activities are exempted by Minister of Finance through Proposed Sales Tax (Exemption from Registration) Order.

How Sales Tax Works?

Taxable Person

Taxable person is a person who manufactures taxable goods and is:-

  • liable to be registered
    • Reached sales threshold
      • Manufacturer — RM 500,000.00
      • Sub-contractor — RM 500,000.00
  • registered under Sales Tax Legislation
    • Mandatorily registered
    • Voluntarily registered
Service tax is charged:-
  • taxable services;
  • provided in Malaysia
  • by a registered person carrying on his business
  • imported taxable services (c.i.o 1 January 2019)
Threshold:-
  • Any person providing taxable services liable to be registered if the total amount of taxable services provided by him in 12 months exceed threshold.
Tax Rate
  • 6% (from 1 September 2018 to 29 February 2024)
  • 8% (effective from 1 March 2024), except for food and beverage (F&B) services, parking services, logistics, and telecommunications services, which remain at 6%.
  • Provision of credit card or charge card services:
    • A specific tax rate of RM25 is imposed on the issuance of a principal card or supplementary card, and for every subsequent year or part thereof.
  • Effective from 1 July 2025, the scope of Service Tax has been expanded to include the following new services:
    1. Rental or leasing services – 6% (effective from 1 January 2026)
    2. Construction work services – 6%
    3. Financial services – 8%
    4. Private healthcare services – 6%
    5. Education services – 6%
Registration:- Any person carrying on a business and providing taxable services at the prescribed place or establishment is required to be registered under the Service Tax Act. The taxable services are as follows: How Service Tax Works?
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