What is SST 8%? Types, How to Charge, and SST Filling

On March 1, 2024, many business owners in Malaysia noticed something different on their invoices, which was that the service tax had gone up.

What used to be 6% is now SST 8%. While the change may seem small, its impact is not.

For employers, HR teams, and business owners, this increase brings a new set of questions:

Does it apply to my business? What services are affected? How do I charge and report it?

If you’re running a business in Malaysia, SST 8% affects how you price your services, how you manage your invoices, and how your HR team handles staff packages.

In this article, we’ll break everything down, from what SST means to how to stay compliant without confusing your team or your customers.

What is SST?

SST stands for Sales and Services Tax. It’s a consumption tax in Malaysia, which means customers pay it when they buy certain goods or services.

But it’s the business that collects the tax and submits it to the government.

SST is made up of two parts:

Sales Tax: taxable goods that are manufactured in or imported into Malaysia.
Service Tax: specific services provided by businesses.

The key point is that SST is charged at only one stage. For example, the tax is either collected during manufacturing (sales tax) or when the customer pays for a service (service tax).

This is different from the old GST system, which was applied at multiple stages and allowed businesses to claim back tax on purchases.

SST was reintroduced in 2018 to replace GST. While it’s simpler in some ways, it still comes with rules that every business needs to follow.

Types of Goods or Services Subject to SST

In Malaysia, SST is not charged on everything. It only applies to specific goods and services, depending on whether they fall under the Sales Tax or Service Tax categories.

Sales Tax is charged on goods, while Service Tax is charged on services. Here's what that means in practice:

Goods Subject to Sales Tax

Sales tax is usually charged when goods are either manufactured in Malaysia or imported. The standard rate is either 5% or 10%, depending on the type of product.

For example:

A 5% sales tax applies to items like petroleum oils, building materials, and certain food products.
A 10% sales tax is more common for non-essential or luxury goods, such as electronics, air conditioners, clothing, timepieces, and cars.

Some goods are exempted from sales tax altogether, including exports, fresh food, books, medicine, bicycles, and baby products.

These exemptions are designed to keep basic living costs affordable and to support health and education.

If you run a business that manufactures or imports taxable goods, even on a small scale, sales tax may apply.

This is especially relevant for businesses in retail, wholesale, or distribution.

Services Subject to Service Tax

Service Tax is charged at either 6% or 8%, depending on the service type.

Services taxed at 8% include:

Professional services like accounting, legal, architecture, or consulting
Cleaning and maintenance services
Advertising and digital marketing
Training and coaching
IT support and software subscription services
Courier and delivery services (excluding logistics)

Services that remain at 6% include:

Food and beverage (restaurants, catering)
Telecommunication (mobile plans, internet services)
Parking services
Logistics and freight forwarding services

SST 8%: How Does It Apply to Your Business?

In March 2024, the government increased the service tax from 6% to 8%.

This move was made to support national income and balance the country’s tax system. But it did not apply to all services.

Here’s what happened:

If your business provides general taxable services like professional consulting, IT services, or management services, you must now charge 8% service tax.
If you’re running a restaurant, café, telco business, logistics company, or parking services, the service tax remains at 6%.
Some services are still zero-rated (taxed at 0%) or exempted, especially when it comes to exports or essential items.

Let’s say you operate a cleaning service company. Starting from 1 March 2024, you must start charging customers SST 8% for your services.

But if you run a food court, you continue charging 6%. Knowing the difference is important because overcharging or undercharging SST can create legal problems.

Who Needs to Register for SST?

Not every business in Malaysia needs to collect SST.

But if you’re running a business that provides taxable goods or services, and your yearly sales exceed RM500,000, you must register for SST.

The rules are slightly different depending on your industry:

For Sales Tax, manufacturers of taxable goods must register once their 12-month sales go over RM500,000.
For Service Tax, providers of taxable services (like consultancy, maintenance, security, and more) must also register when their service revenue crosses RM500,000 in the past 12 months.

This registration is done through the MySST portal. Once you register, the system gives you an SST number and the effective start date.

You’ll also get a letter of confirmation by email, which is important for record-keeping and future audits.

How to Charge SST 8%?

First, you must start charging 8% service tax on the total service amount. This should be stated clearly on your invoices.

For example, if you provide HR consulting services worth RM1,000, you must add RM80 as service tax, making the total RM1,080.

Your invoices must include:

Your business name and SST registration number
Date of transaction
Description of service provided
The 8% tax is clearly shown as a separate line

If you’re using e-invoicing software, make sure the system reflects the correct SST rate.

For manual invoices, it’s important to double-check the tax calculations before you send them to clients.

SST Filing and Payment for Businesses

Once registered, your business must file SST returns and pay the tax collected. This must be done every two months.

You submit your SST return using Form SST-02 on the MySST portal. The return must include:

Total taxable services sold
Total SST collected
Any adjustments or credits

The deadline for filing and payment is the last day of the following month after the two-month period ends.

For example, if you’re reporting from March to April, your filing is due by 31 May.

Missing this deadline can lead to penalties. Here's how it works:

If you’re late by 1–30 days: 10% penalty
Late by 31–60 days: 15% penalty
Late by 61–90 days: another 15% penalty
More than 90 days late: penalties can go up to 40%

On top of that, failure to submit or pay SST can lead to fines of up to RM50,000, three years of jail, or both.

Benefits and Challenges of SST 8% for Employers

Some employers find SST easier than GST, mainly because it’s charged at a single stage.

You don’t need to claim input tax or keep complex records of multiple transaction layers.

This reduces the workload for small businesses, especially those with fewer resources for accounting.

However, challenges remain. Many businesses find it hard to keep up with which services are taxed at 6%, 8%, or not taxed at all.

Some systems may not be updated yet, leading to incorrect billing.

For companies that deal with both goods and services, managing Sales Tax and Service Tax at the same time can be confusing.

There’s also the challenge of training HR or finance staff to understand SST 8% and apply it correctly, especially if your company offers packages that mix taxable and non-taxable services.

Impact of SST 8% on Recruitment and Payroll

Does SST 8% affect your employees? The answer depends on how your business operates.

For companies that offer benefits as services, such as in-house transport, meals, or third-party perks, SST may apply to those service costs.

This affects how you calculate total expenses for staff packages.

In some cases, businesses may also review salaries or restructure packages to balance out the extra costs from SST.

For example, a company offering subsidised health services might need to reassess its benefits budget if those services become taxable.

Common Mistakes Employers Make with SST

Some of the most common SST errors include:

Charging SST on exempted services
Forgetting to apply SST when the business reaches the RM500,000 threshold
Mixing up the 6% and 8% rates
Failing to update invoices or systems to reflect new rates

Documentation mistakes also happen, like leaving out the SST registration number on an invoice or failing to keep proper records for returns.

These may seem small, but can trigger audits or lead to penalties during checks.

How to Ensure Full Compliance with SST 8%

Staying compliant starts with keeping good records. Every invoice, payment, and SST return should be filed properly and stored for at least seven years.

It’s also good to conduct regular internal checks, especially after any major tax updates like the SST 8% increase.

This helps you spot issues early and fix them before they become serious.

Consider getting help from a licensed tax agent if your business is growing or expanding into new areas.

The SST framework can get tricky when you deal with different industries or combine goods and services in one offering.

FAQ

Is SST applicable to all businesses in Malaysia?

No. SST only applies if your business provides taxable goods or services and your revenue goes over the RM500,000 threshold in a 12-month period.

Can a business claim back SST paid on expenses?

Unlike GST, SST is not claimable. You cannot get back the SST paid on your business purchases.

What happens if my business fails to register for SST?

You may face penalties, including fines up to RM50,000, imprisonment for up to 3 years, or both.

How does SST affect employee wages and benefits?

It can affect company spending on staff benefits if those benefits involve services taxed under SST 8%. Some businesses may adjust packages to handle rising costs.

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