When does my business have to register for service tax in Malaysia, and at what rate?
Service tax is charged on listed taxable services at 8%, except 6% for food and beverage, logistics, telecommunications, parking, construction, private healthcare and private education. Registration depends on the service: RM500,000 in 12 months for rental or leasing and financial services, RM1.5 million for food and beverage, construction and private healthcare, and private schools charging over RM60,000 per student a year.
Service tax is charged by providers of services listed as taxable under the Service Tax Act 2018.
Rates (Customs)
- 8% for taxable services in general.
- 6% for food and beverage, logistics, telecommunications and parking.
- 6% for construction work, private healthcare and private education, which became taxable on 1 July 2025.
- Credit and charge cards: RM25 per card.
Registration thresholds (value of taxable services in a 12-month period, tested on a backward or forward 12-month basis):
- Rental or leasing, financial services and beauty treatment: RM500,000.
- Food and beverage services: RM1.5 million, as in Customs' FAQ on cafeterias.
- Construction work (not residential buildings): RM1.5 million.
- Private healthcare and related services: RM1.5 million.
- Private education: only institutions charging more than RM60,000 per student per academic year need to register.
Other older service groups have their own thresholds, so check Customs' guide for your group on the MySST portal.
Below the threshold: you do not have to register, although voluntary registration is allowed, and until you register you cannot charge the tax.
Foreign digital service providers: a separate regime applies to overseas providers selling digital services to Malaysian customers.
After registration: you charge service tax on invoices, file the SST-02 return and pay Customs.
Legal basis
- Service Tax Act 2018
- Service Tax (Rate of Tax) Order 2018 as amended 2025
Sources
Applies to 2025 onwards · Last reviewed 29 October 2026
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
Related questions
- What personal income tax rates apply to business owners in Malaysia?Resident individuals pay progressive tax from 0% on the first RM5,000 up to 30% on income above RM2 million. Non-residents pay a flat 30%. The rates apply to total chargeable income after reliefs.
- Who must register for sales tax in Malaysia and what are the rates?Sales tax is charged on taxable goods made in Malaysia by registered manufacturers and on taxable imports. Rates are 5%, 10% or a specific rate; since 1 July 2025, goods not listed in the 5% or specific-rate orders are taxed at 10%. A manufacturer must register once taxable sales exceed RM500,000 in 12 months.
- What changed in service tax from 1 July 2025?From 1 July 2025 Customs extended service tax to rental or leasing (8%), financial services (8%), beauty treatment (8%), construction (6%), private healthcare (6%) and private education (6%), subject to thresholds and exclusions. Sales tax rates changed on the same date, with unlisted goods taxed at 10%.
- How does real property gains tax (RPGT) work in Malaysia?RPGT is charged on gains from disposing of land, buildings and shares in real property companies. Rates fall with the holding period. For Malaysian citizens and PRs it is 30%, 30%, 20%, 15% in years 1 to 5, and nil from the 6th year. Companies pay 10% from year 6.
- What tax incentives can a Malaysian SME realistically use?Most major incentives, such as pioneer status, investment tax allowance and reinvestment allowance, target manufacturing and approved activities and need approval. Pioneer status exempts 70% of statutory income for five years; reinvestment allowance gives 60% of qualifying spending for established manufacturers.