Short answer: SST depends on the type of service you sell, not on the size of your business. The base rate has been 8% since 1 March 2024 — but several groups stay at 6%, and since 1 July 2025 the scope of service tax has been expanded to cover rental, construction, financial services, private healthcare, education and beauty.
Which means: if your business has more than one revenue line, each one may carry a different rate.
The base rate and the exceptions
All taxable services are charged at 8%, except:
- Food and beverage (F&B) services — 6%
- Logistics services — 6%
- Telecommunications services — 6%
- Parking space services — 6%
- Credit card or charge card services — RM25 per card
This matters for F&B businesses: your food sales are 6%, but if you also rent out space, or provide other services, those parts may carry a different rate.
New groups from 1 July 2025
| Group | Service | Rate | Registration threshold |
|---|---|---|---|
| K | Rental or leasing of assets | 8% | RM500,000 per year |
| L | Construction works | 6% | RM1,500,000 per year |
| M | Education | 6% | Check with Customs |
| H | Financial services | 8% | Check with Customs |
| I | Private healthcare | 6% | Check with Customs |
| C | Beauty and wellness centres | Check with Customs | Check with Customs |
Important note: rates and effective dates differ by group, and Customs’ own reference material states different rates and dates for rental or leasing in different documents. Confirm your specific group with Customs before you change any pricing.
The exemptions most people miss
- Residential rental is exempt. That includes houses, and also SoHo units, serviced apartments, serviced condominiums and residential suites. Warehouse, shop and office rental are not exempt.
- Construction of residential buildings is exempt, including public facilities related to them — but this does not extend to mixed development.
- Rental of reading materials is exempt.
- Tangible assets located outside Malaysia are exempt.
- Leasing through a financial lease is exempt.
Three mistakes I see constantly
- Assuming every revenue line carries the same rate. An F&B business that also rents out space, or runs a wellness service, usually gets this wrong.
- Not checking the registration threshold. Thresholds differ by group — RM500,000 for rental, RM1,500,000 for construction. Many owners assume the threshold is uniform.
- Absorbing the tax into the price. If you keep selling at the old rate while your tax rises, the difference comes out of your margin. This is the quietest and most expensive mistake of the three.
What to do
- List every revenue line you have — not every product, but every type of service you sell.
- Mark the group and threshold for each. If there is one you are unsure about, that is a signal to ask Customs, not to guess.
- Review your selling prices. If the tax rate on that line changed, your price needs reviewing — not absorbing.
- Separate the revenue lines in your accounting system. If everything lands in one account, you cannot see which line is eating your margin.
FAQ
What is the SST rate now? A base rate of 8% on taxable services, except F&B, logistics, telecommunications and parking, which stay at 6%.
Does SST apply to every business? No. It depends on the type of service and whether you cross the registration threshold for that group.
Is my residential rental subject to SST? No. Residential accommodation rental is exempt, including SoHo units and serviced apartments. Commercial rental is not exempt.
When did the 8% rate start? 1 March 2024. The scope expansion took effect on 1 July 2025.
What if I received payment before the effective date? Payments received before the effective date are charged at the old rate. Services provided after that date are charged at the new rate.
What is the risk if I get it wrong? Two things: additional tax liability, and your margin eroding quietly all year without you noticing.
SST is not a tax problem. It is a pricing problem. Businesses that calculate it correctly keep their profit; businesses that absorb it will see sales rise while profit does not — and not know why.
If you want to know where your business is actually stuck, message me for a business assessment I do myself.
— Datuk Wira Dr Azizan Osman
Sources: Royal Malaysian Customs Department (MySST) — FAQ on the 2025 Expansion of Service Tax Scope and FAQ on Service Tax; Ministry of Finance media release on the revision of sales tax rates and expansion of service tax scope effective 1 July 2025; BDO Malaysia’s SST summary. This article is not tax advice — confirm your specific group and threshold with Customs.