SST vs GST in Malaysia: What’s the Difference?

Understanding the Difference Between SST and GST in Malaysia
March 6, 2026 by
SST vs GST in Malaysia: What’s the Difference?
CONZLAB BERHAD 202301040401 (1534320P), Mira

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

FeatureSSTGST
Tax SystemSingle-stage taxMulti-stage tax
CoverageLimited goods and servicesMost goods and services
Tax Rate5–10% (sales) and 6–8% (service)Previously 6%
Tax ClaimCannot claim input taxBusinesses can claim input tax
ComplexitySimplerMore complex
Current StatusUsed in Malaysia todayReplaced 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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SST vs GST in Malaysia: What’s the Difference?
CONZLAB BERHAD 202301040401 (1534320P), Mira March 6, 2026
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