FAQ Sales Tax Rate 2025

List of FAQs about Transition of Sales Tax Rate Changes 2025

1. Q: When is the effective date of the new sales tax rate change?

A : The new sales tax rate change takes effect on 1 July 2025.

2. Q : Where can I refer to the list of goods affected by the new sales tax rate change?

A : The list of goods affected by the sales tax rate change is as follows:
i. the rate of 5% and specific rates can be referred to under the Sales Tax (Rate of Tax) Order 2025.
ii. the exempted goods can be referred to under the Sales Tax (Goods Exempted from Tax) Order 2025.
If the goods are not listed in either of the above orders, the tax rate on the goods is subject to 10%. Both orders can be accessed at the following link https://mysst.customs.gov.my/. 

3. Q : How can I determine if my manufacturing activity meets the definition of manufacturing under the Sales Tax Act 2018?

A : Based on Section 3 of the Sales Tax Act 2018, the definition of manufacturing is the manual or mechanical transformation of organic or non-organic materials into a new product by altering the size, shape, composition, nature, or quality of those materials. It also includes the assembly of parts into machinery or other products, but does not include the assembly of machinery or equipment for construction purposes. For further inquiries, the company can refer to the Internal Tax Division in
the respective state.

4. Q : Am I required to register as a registered manufacturer if the finished exempted goods are manufactured subject to the new sales tax rate from exempted goods to taxable goods at a rate of 5% or 10%?

A : Yes, your company is required to be registered under Section 13 of the Sales Tax Act 2018 if the total value of taxable goods sold exceeds the threshold amount of RM500,000 within a 12 months.

5. Q: How can I register as a registered manufacturer under the Sales Tax Act 2018?

A : Registration may be completed online via the MySST system.
Upon successful registration, a notification will be sent to the
email address provided during the registration process.

6. Q :Is voluntary registration permitted under the Sales Tax Act 2018

A : Voluntary registration is permitted under Section 14 of the Sales Tax Act 2018, provided that you are engaged in the manufacturing of taxable goods and the total value has not reached the threshold amount of RM500,000.00.

7. Q : How may I obtain verification as to whether the tariff code of the imported or manufactured goods is subject to a change in the applicable sales tax rate?

A : You may obtain confirmation of the tariff code from the Technical Services Division of the relevant State. Once the tariff code has been confirmed, you can refer to the sales tax rate through the Sales Tax Order (Tax Rate) 2025 and the Sales Tax (Exempted Goods from Tax) Order 2025. The updated sales tax rate can be found under the Sales Tax (Tax Rate) Order 2025 on the MySST portal at https://mysst.customs.gov.my/. If the tariff code for the goods is not listed in the aforementioned orders, the sales tax rate applicable to those goods shall be 10%. Any further inquiries, please refer to the Domestic Tax Division at the relevant State.

8. Q : I have purchased goods from abroad. Although the supplier has not yet shipped the goods, the invoice was issued prior to the effective date of the new sales tax rate. The goods are expected to be imported after the effective date of the new sales tax rate. Will these goods be subject to the new sales tax rate?
A : Yes, the imported goods will be subject to the applicable new sales tax rate when they are released from Customs control by the authorized Customs officer. The importation of goods into Malaysia must be declared on Customs Form No. 1 (K1). For taxable goods, the sales tax applicable is paid through the submission of Form K1.
9. Q : I am a newly registered manufacturer under the Sales Tax Act 2018. Am I entitled to any sales tax exemptions? What is the process for applying for a sales tax exemption?
A : As a registered manufacturer, you are eligible to purchase raw materials, components, packing and packaging materials, manufacturing aids, and cleanroom equipment exempt from sales tax. You may apply for a sales tax exemption under the Sales Tax (Persons Exempted from Payment of Tax) Order 2018, subject to the conditions outlined in the details and the order itself. Applications for the sales tax exemption certificate can be submitted online via the portal at https://mysst.customs.gov.my/. The manual for applying for the sales tax exemption certificate is available for reference at https://mysst.customs.gov.my/AboutExemption
10. Q : I am a manufacturer of goods exempt from sales tax and not registered under the Sales Tax Act 2018. On the effective date, the sales tax rate for these finished goods changed from exempt to 5%. Am I required to impose sales tax on the finished goods I manufacture when they are sold on or after the effective date of the new sales tax rate?
A : Your company is required to register as a registered manufacturer under Section 13 or 14 of the Sales Tax Act 2018 to charge sales tax on the manufactured goods starting from the effective date of the registration approval letter.
Disclaimer: This information is intended to provide a general understanding of the relevant treatment under Sales Tax and Services Tax Legislation and aims to provide a better general understanding of taxpayers’ tax obligations.While RMCD has taken the initiative to ensure that all information contained in this FAQs is correct, the RMCD will not be responsible for any mistakes and inaccuracies that may be contained, or any financial loss or other incurred by individuals using the information from this FAQs.All information is current at the time of preparation and is subject to change when necessary.