Malaysia Sales and Service Tax (“SST”) increase to 8% in March 2024

With reference to the announcement made by the Royal Malaysian Custom Departments, the SST rate has been increased to 8% from 6% with effective from 1 March 2024. Its applicable to all existing taxable services except for food and beverages services, telecommunication services, parking space rental services and logistics services. However, the scope of service tax will widen to include karaoke center services (group C), brokerage and underwriting services (group I) and delivery services (group J).

Transition rules: SST - 6% or 8%:

The tax rate for taxable services is determined based on the service performed date. Which means that the invoice date is not the criteria for tax rate determination. If the entire services provided before 1 March 2024, 6% will be taxed regardless of payment received date or invoice date.

Whereas for the services provided after 1 March 2024, the tax rate determination will be based on the collection date:

- Full collection received before 1 March 2024 will be taxed at 6%

- Partial collection received before 1 March 2024 will be taxed at 6% and collection received after 1 March 2024 will be taxed at 8%

- Full collection received after 1 March 2024 will be taxed at 8%

For spanning services provided, it will be based on apportionment.

- Services performed before 1 March 2024, collection received after that date will be taxed at 6%

- Collection before 1 March 2024 and services performed after that date will be taxed at 6%

- Partial collection received before 1 March 2024, services performed after that date will be charged at 6% for the partial collection received and remaining balance will be charged at 8%

- Services and collection after 1 March 2024 will be taxed at 8%