GST, SST, and Tax Basics Every New Malaysian Business Owner Should Know

"Do I need to charge GST?" is still one of the most common tax questions from new founders — understandably, since GST existed in Malaysia until 2018. It doesn't anymore. What replaced it, and what actually applies to a new business, is a different system with its own rules.

GST is gone. SST is what exists now.

Malaysia abolished GST (Goods and Services Tax) in 2018 and reinstated SST (Sales and Service Tax) — a narrower, two-part tax rather than the broad-based GST model. If you're researching tax setup and a source is talking about GST as current, it's outdated. SST is administered by the Royal Malaysian Customs Department (RMCD), not LHDN.

Sales Tax vs Service Tax — two separate things

• ■Sales Tax — charged on manufactured or imported goods, generally at 10% standard rate, with a 5% rate on certain goods and some categories exempt or at 0%
• ■Service Tax — charged on prescribed taxable services, generally at 6%, with an 8% rate applying to selected services such as financial services, logistics, and telecommunications since March 2024
• ■These are registered and filed separately — a business could need one, both, or neither depending on what it actually does

The registration threshold

The general SST registration threshold is RM500,000 in annual taxable turnover, assessed on a rolling 12-month basis rather than a fixed calendar year — meaning you need to actually monitor your turnover on an ongoing basis, not check once a year. If your taxable turnover for any trailing 12-month period crosses the threshold, registration is required, typically within a set window after crossing it.

The scope of SST has been expanding — service categories like leasing and rental, construction, and certain financial and education services have been added to the taxable net in recent changes, with enforcement dates and thresholds still being fine-tuned. Don't assume your industry is exempt just because it was a few years ago — check MySST directly for your specific category.

What this means for a new, small business

Most brand-new small businesses start well under the RM500,000 threshold, meaning SST registration isn't an immediate concern. It becomes relevant as revenue grows — which is exactly why tracking your turnover properly from day one (see our guide on setting up basic accounting) matters: you need to actually know when you're approaching the threshold, not discover it after the fact.

Where e-Invoice fits into this

e-Invoice, administered by LHDN, is a separate obligation from SST — it's about how you issue invoices, not a new tax. It's been rolling out in phases by business turnover, progressively including smaller businesses over time. See our SSM/LHDN/EPF/SOCSO explainer for where this fits into the bigger compliance picture.