Taxes are an important part of running a business in Malaysia. Two tax systems people often hear about are Sales and Service Tax (SST) and Goods and Services Tax (GST).
Both are consumption taxes, which means the tax is paid when people buy goods or services. However, the way these two systems work is very different.
What is SST?
SST (Sales and Service Tax) is the current tax system used in Malaysia today. It was reintroduced in 2018 after GST was removed.
SST consists of two types of taxes:

1. Sales Tax
Sales Tax is charged on certain goods that are:
- Manufactured in Malaysia
- Imported into Malaysia
The common Sales Tax rates are:
- 5%
- 10%
This tax is usually paid by manufacturers or importers, and the cost is often passed on to consumers through product prices.
2. Service Tax
Service Tax is charged on certain services provided by businesses.
Common industries that charge Service Tax include:
- Restaurants and cafes
- Hotels and accommodations
- Professional services
- Digital services
The typical Service Tax rate is 6%, although some services may have different rates.
What is GST?
GST (Goods and Services Tax) was introduced in Malaysia in 2015 and later replaced by SST in 2018.
GST was a broad-based tax system that applied to most goods and services.

Under GST, tax was charged at every stage of the supply chain, including:
- Manufacturers
- Distributors
- Wholesalers
- Retailers
The GST rate in Malaysia was 6%.
One important feature of GST was the Input Tax Credit system, where businesses could claim back the GST they paid on purchases.
Key Differences Between SST and GST
| Feature | SST | GST |
|---|---|---|
| Tax System | Single-stage tax | Multi-stage tax |
| Coverage | Limited goods and services | Most goods and services |
| Tax Rate | 5–10% (sales) and 6–8% (service) | Previously 6% |
| Tax Claim | Cannot claim input tax | Businesses can claim input tax |
| Complexity | Simpler | More complex |
| Current Status | Used in Malaysia today | Replaced in 2018 |
Which Tax System is Better?
Both tax systems have advantages and disadvantages.
SST Advantages
- Simpler system
- Less compliance for businesses
- Fewer companies need to register
SST Disadvantages
- Tax may be hidden in product prices
- Limited coverage
GST Advantages
- More transparent tax system
- Businesses can claim tax credits
- Broader tax base
GST Disadvantages
- More complicated
- Requires detailed reporting
- Higher compliance cost for businesses
Need Help Understanding SST vs GST?
Not sure how SST and GST work for your business? We’re here to help.
Our team can guide you on tax requirements and compliance under the Sales and Service Tax (SST)
Contact us today to make your tax process simple and easy.
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No. GST was replaced by SST in 2018, and SST is the current tax system used in Malaysia.
Businesses that provide taxable goods or services and exceed the required revenue threshold must register for SST with the Royal Malaysian Customs Department.
Sales Tax is usually 5% or 10%, while Service Tax is commonly 6% depending on the type of service.
SST vs GST in Malaysia: What’s the Difference?