Taxes
Malaysia — Tax: Sales and Service Tax (SST)
Malaysia does not have a VAT; instead it operates a Sales and Service Tax (SST) with dual sales tax rates on goods (5% and 10%, with most manufactured goods at 10%) and dual service tax rates (8% for most taxable services, 6% for essentials such as F&B, telecommunications, parking, logistics, and select categories like private healthcare for non-Malaysians). Effective 1 January 2026, the service tax rate on industrial rental/leasing services dropped from 8% to 6%, and the MSME exemption threshold for rental/leasing service tax rose from MYR 1 million to MYR 1.5 million in annual sales. SST registration applies to businesses with annual taxable turnover exceeding RM500,000 (RM1,000,000 for rental/leasing services).
VerifiedGovernment / official sourceRoyal Malaysian Customs Department (SST)Last reviewed: 2026-07-19
Key facts
- Sales tax: 5% and 10% (most manufactured goods at 10%).
- Service tax: 8% standard, 6% for essentials (F&B, telecom, logistics, select categories like non-Malaysian private healthcare).
- From 1 Jan 2026: industrial rental/leasing service tax dropped from 8% to 6%; MSME rental/leasing exemption threshold raised to MYR 1.5M.
- Registration threshold: RM500,000 annual turnover (RM1,000,000 for rental/leasing services).
Costs
- Standard service tax rate: 8%
- Essential services tax rate: 6%
- Sales tax range: 5-10%
Timelines
- Industrial rental/leasing rate cut and MSME threshold increase: effective 1 January 2026
Common mistakes
- Referring to Malaysia's indirect tax as 'VAT' — it operates SST, a dual sales-and-service-tax system with different mechanics and rates.