Your ecommerce business just crossed RM 40,000 in monthly sales. You are celebrating, but a question is nagging: do you owe the government something beyond income tax?
If you sell taxable goods in Malaysia and your annual turnover exceeds RM 500,000, the answer is yes. You must register for SST (Sales and Service Tax) with the Royal Malaysian Customs Department (RMCD) and start charging tax on your sales. Miss this threshold and keep selling without registration, and you face fines of up to RM 50,000 and potential imprisonment.
This guide explains exactly how SST works for ecommerce sellers, when you need to register, what rates apply, and how to stay compliant.
What Is SST?
SST stands for Sales and Service Tax. It replaced Malaysia’s previous Goods and Services Tax (GST) in September 2018 and is administered by the Royal Malaysian Customs Department (RMCD).
Unlike the old GST which was a single multi-stage tax, SST is a two-component system:
- Sales Tax — charged on taxable goods manufactured in or imported into Malaysia. Standard rate is 10%, with a reduced rate of 5% for certain items.
- Service Tax — charged on prescribed taxable services. Standard rate is 8%.
For ecommerce sellers, the critical question is whether your products are taxable goods and whether your revenue crosses the registration threshold. The answer determines whether SST is something you deal with now or something to prepare for as you grow.
For a broader overview of your tax obligations as a Malaysian online seller, see our ecommerce tax compliance hub.
Does SST Apply to Your Ecommerce Business?
SST does not apply equally to all online sellers. Your obligation depends on your role in the supply chain:
If You Manufacture or Assemble Products
You are a taxable person under the Sales Tax Act 2018 if you manufacture or assemble goods in Malaysia and your annual turnover of taxable goods exceeds RM 500,000. You must register for sales tax and charge it on your products.
This applies to sellers who produce their own goods, including handmade products, custom-assembled electronics, or locally manufactured food items.
If You Import Products for Resale
Sales tax is collected at the point of import by RMCD. As the importer, you pay sales tax when goods clear customs. This cost is built into your product pricing. You do not charge sales tax again when you sell to the end customer, because the tax has already been paid at import.
However, if you are importing and your total import value of taxable goods exceeds RM 500,000 per year, you may need to register as a registered importer with RMCD for compliance tracking.
If You Resell Locally Purchased Products
If you buy goods from a local manufacturer or distributor who has already charged sales tax, and you simply resell those goods (on Shopee, Lazada, your own website, or anywhere else), you are generally not required to register for SST. The sales tax was already paid upstream.
This is the situation most marketplace resellers are in. You are not manufacturing, and you are not importing. The tax has been embedded in the purchase price from your supplier.
If You Provide Digital Services
If you provide taxable services (including certain digital services like SaaS subscriptions, digital content, or online advertising), you may be subject to service tax at 8% if your annual revenue from taxable services exceeds RM 500,000. Foreign digital service providers selling to Malaysian consumers are subject to the Digital Service Tax.
SST Rates: What You Need to Know
| Tax Type | Standard Rate | Reduced Rate | Exempt |
|---|---|---|---|
| Sales Tax | 10% | 5% (food, building materials, certain IT products) | Basic necessities, certain agricultural products |
| Service Tax | 8% | N/A | Non-prescribed services |
Sales Tax Rate Categories
Not all goods are taxed at the same rate:
- 10% rate: Most manufactured goods, including electronics, clothing, cosmetics, household items, and general merchandise
- 5% rate: Certain food preparations, building materials, IT products (laptops, phones, tablets), and specific petroleum products
- Exempt goods: Basic food items (rice, sugar, cooking oil, fresh vegetables), medical devices, certain agricultural inputs, books, and newspapers
Check the Sales Tax (Rates of Tax) Order 2018 for the complete schedule of rates and exemptions applicable to your products.
The RM 500,000 Threshold: How It Works
The registration threshold of RM 500,000 is based on your annual turnover of taxable goods or taxable services. Here is how to calculate it:
For sales tax:
- Total the value of all taxable goods you manufactured in the past 12 months
- Include goods sold domestically AND exported (though exports are rated at 0%)
- Exclude exempt goods and goods not subject to sales tax
For service tax:
- Total the value of all taxable services you provided in the past 12 months
- Include only services prescribed as taxable under the Service Tax Regulations
Important: The threshold is a rolling 12-month figure, not a calendar year figure. RMCD looks at any consecutive 12-month period. If your turnover exceeds RM 500,000 in any 12-month window, you must apply for registration within 28 days.
Example Scenarios
Scenario 1: Shopee reseller earning RM 600,000/year You buy branded products from a local distributor and resell on Shopee. Your distributor has already paid sales tax. You are a reseller, not a manufacturer or importer. SST registration is not required, regardless of your revenue.
Scenario 2: Handmade soap business earning RM 550,000/year You manufacture soap at home and sell on Shopee and your own website. Your taxable manufactured goods exceed RM 500,000. You must register for SST and charge 10% sales tax on your products.
Scenario 3: Dropshipper importing RM 400,000/year in products You import goods from China and sell on Lazada. Sales tax is paid at customs when the goods enter Malaysia. Your import value is below RM 500,000. SST registration is not required, but you are still paying sales tax indirectly through customs duties.
How to Register for SST
If you have determined that you are a taxable person and your turnover exceeds RM 500,000, here is how to register:
Step 1: Prepare Your Documentation
Gather:
- SSM registration certificate (business or company registration number)
- Business financial records showing monthly turnover for the past 12 months
- List of goods manufactured or services provided
- Bank account details
- Business address and contact information
Step 2: Apply Online via MySST Portal
Go to mysst.customs.gov.my and create an account if you do not have one. Navigate to “Registration” and select the appropriate registration type:
- Sales Tax Registration — for manufacturers of taxable goods
- Service Tax Registration — for providers of taxable services
Complete the registration form with your business details, turnover information, and the type of goods or services you provide.
Step 3: Submit and Wait for Approval
RMCD processes SST registration applications within 14-30 days. Upon approval, you will receive:
- Your SST registration number
- The effective date of registration
- Access to the MySST filing system
Step 4: Start Charging and Collecting SST
From your effective registration date, you must:
- Charge SST on all taxable goods or services at the applicable rate
- Issue tax invoices that include your SST registration number, the tax rate, and the tax amount
- Keep records of all taxable transactions for at least 7 years
Filing and Payment
Once registered, you must file SST returns and remit the tax collected:
| Requirement | Details |
|---|---|
| Filing frequency | Every 2 months (bimonthly taxable period) |
| Filing deadline | Last day of the month following the end of the taxable period |
| Payment method | Online via MySST portal (FPX, credit/debit card) |
| Late filing penalty | RM 50/day (capped at RM 5,000 per return) |
| Late payment penalty | 10% of unpaid tax initially, plus 5% increments for continued delay |
Example: For the taxable period January-February, your return and payment are due by March 31.
Even if you collected zero SST in a period (e.g., all your sales were exempt or exported), you must still file a nil return. Failure to file carries the same penalties.
Penalties for Non-Compliance
SST non-compliance carries serious consequences. RMCD has increased enforcement against online sellers in recent years:
| Offence | Penalty |
|---|---|
| Failure to register when liable | Fine RM 10,000-50,000, imprisonment up to 3 years, or both |
| Failure to charge SST when registered | Fine up to RM 50,000, imprisonment up to 3 years, or both |
| Late filing of returns | RM 50/day, maximum RM 5,000 per return |
| Late payment of tax | 10% penalty on unpaid amount, plus incremental 5% penalties |
| Fraudulent claims or evasion | Fine up to RM 50,000, imprisonment up to 5 years, or both |
| Failure to keep records | Fine up to RM 50,000, imprisonment up to 3 years, or both |
The financial consequences extend beyond fines. RMCD can assess and backdate the SST you should have collected from the date you became liable, plus penalties. For a business that has been over the threshold for 2 years without registering, the backdated assessment plus penalties can be devastating.
Pro Tips
Track your rolling 12-month turnover monthly. Do not wait until year-end to check whether you have crossed the RM 500,000 threshold. Create a simple spreadsheet that tracks your cumulative 12-month taxable turnover. When you approach RM 400,000, start preparing for registration.
Understand the difference between total revenue and taxable turnover. Not all your revenue counts toward the RM 500,000 threshold. Only revenue from taxable goods you manufacture or taxable services you provide counts. Revenue from reselling goods (where sales tax was already paid upstream) does not count.
Keep separate records for taxable and non-taxable items. If you sell a mix of taxable and exempt goods, your accounting must clearly distinguish between them. This makes SST returns much easier to prepare and reduces the risk of errors that trigger RMCD audits.
Consider engaging a tax consultant when you approach the threshold. SST compliance has nuances that depend on your specific business model. A tax consultant can confirm whether you are actually liable, identify any exemptions you qualify for, and set up your filing process correctly from day one. This costs RM 1,000-3,000 but can save you from costly mistakes.
Common Mistakes to Avoid
Assuming all online sellers must register for SST. The most common misconception is that every ecommerce seller above RM 500,000 revenue needs SST registration. The threshold applies only to manufacturers of taxable goods and providers of taxable services. Most marketplace resellers are not SST-liable regardless of their revenue because they are not manufacturing anything.
Confusing SST with income tax. SST and income tax are separate obligations. Even if you are exempt from SST, you must still file income tax with LHDN on your business profits. Conversely, registering for SST does not exempt you from income tax.
Not charging SST after registration. Some newly registered sellers continue pricing without SST because they fear losing customers. Once registered, you are legally required to charge SST. Absorbing the tax yourself does not remove the obligation to remit it to RMCD, and it eats directly into your margins.
Missing the 28-day registration window. You must apply for SST registration within 28 days of your turnover exceeding RM 500,000. RMCD can backdate your liability to the date you should have registered, meaning you owe tax on sales you made without collecting it.
Next Steps
If your ecommerce business is growing toward RM 500,000 in annual turnover from manufactured goods, start preparing now. Understanding your SST obligation before you cross the threshold gives you time to adjust pricing, set up accounting systems, and register without panic.
For most marketplace resellers, SST is not an immediate concern, but income tax certainly is. Make sure your business is properly registered with SSM first. If you have not done that yet, our SSM registration guide walks you through the process in 30 minutes.
For sellers also operating in Singapore, GST works differently. Our guide on GST registration for Singapore ecommerce companies covers the SGD 1 million threshold and the key differences from Malaysia’s SST system.
This guide covers general information about SST for ecommerce sellers in Malaysia. Tax obligations depend on your specific business structure and activities. Verify current rates, thresholds, and regulations at mysst.customs.gov.my or consult a licensed tax advisor for your specific situation. Last verified: March 2026.