Malaysia’s New SST Rules Effective 1 July 2025

Malaysia’s New SST Rules Effective 1 July 2025! (5-10%)

The Malaysian Government has officially announced that the updated Sales and Services Tax (SST) regulation will be enforced starting 1 July 2025. Businesses are encouraged to take the necessary steps to comply with the new tax structure.

  1. Sales Tax Structure
  • 0% Rate – Essential items
     ✅ Examples: fresh vegetables, chicken, paracetamol, school textbooks

     

  • 5% Rate – Premium or non-essential goods
     ✅ Examples: imported cheese, fine linen, scented candles

     

  • 10% Rate – Luxury items
     ✅ Examples: designer handbags, mountain bikes, vintage watches, cigars

     

  1. Service Tax Structure
  • 8% Rate – Selected services
     ✅ Applies to: commercial property rentals, investment advisory fees, spa treatments

     

  • 6% Rate – Services for non-citizens
     ✅ Applies to: outpatient services at private clinics, renovation works, international schools, private universities for foreigners

Government Support and Transition Measures

To ease the transition micro, small, and medium enterprises (MSMEs), the government will provide several forms of assistance:

  • A penalty-free grace period until 31 December 2025 to allow businesses time to adjust

     

  • Revenue thresholds that exclude smaller businesses from having to charge the new taxes

     

  • Exemptions for B2B and intra-group services to prevent instances of double taxation

     

  • A 12-month exemption for contracts signed before the new SST that are not subject to review

     

  • Ongoing tax exemptions for essential goods, public healthcare services, and educational institutions

For more info visit: https://www.mof.gov.my/portal/en/news/press-release/targeted-revision-of-sales-tax-rate-and-expansion-of-service-tax-scope-effective-1-july-2025