Malaysia Sales Tax 2018

The Sales Tax, a single stage tax, was levied at the import or manufacturing levels. In Malaysia, it is a mandatory requirement that all manufacturers of taxable goods are licensed under the Sales Tax Act 2018. Government collects Sales Tax at the manufacturer’s level only and the element of sales tax embedded in the price paid by the consumer.

Companies (Manufacturer or Sub-contractor) with a sales value of taxable goods exceeded RM500,000 for 12 months period are liable to be registered under the Sales Tax Act 2018.

Goods which are not exempted through Proposed Sales Tax (Goods Exempted From Sales Tax) Order will be charged sales tax at various rates (5% to 10%) prescribed. Sales tax for petroleum is charged on a specific rate which is different from other taxable goods.

Refer to Proposed Sales Tax Rate for Various Goods for more information.

The following manufacturing activities have been exempted from SST registration:

  • Tailoring
  • Installation incorporation of goods into building
  • Jeweller, optician

Accounting Basis for Sales Tax

Companies shall prepare their SST return in accrual basis for Sale Tax purposes. Sales Tax required to be accounted at the time when the goods are sold, disposed or first used.

Companies who sells taxable goods must issue invoices containing the prescribed particulars. The invoices can be in hardcopy or electronically, Bahasa Melayu or English. Any credit notes and debit notes issued shall make an adjustment in SST return.

Bad debts can be claimed by a registered manufacturer or a person who ceased to be registered manufacturer. The business shall claim within 6 years from the date the taxable goods is sold and subject to condition and satisfaction of the DG. For bad debts recovered from the debtor after bad debts claimed and received the sales tax refund, the registered manufacturer must repay the sales tax refund to DG in his return.

The businesses must keep its records in Malaysia for 7 years. It is subjected to the DG approval for record keeping at overseas. The record can be kept in softcopy or hardcopy.