Introduction
Service Tax registration in Malaysia is governed under the Service Tax Act 2018, which requires any person providing taxable services to register when they reach the prescribed threshold.
This article explains the mandatory and voluntary registration, branch registration, taxable periods, and penalties for late payment — ensuring compliance under Malaysia’s SST (Sales and Service Tax) system.
Mandatory Registration for Service Providers
Under Section 13 of the Service Tax Act 2018, any person providing taxable services must register once the total value of taxable services exceeds the prescribed threshold (RM500,000).
There are two methods to determine registration liability:
| Method | Description |
| Historical Method | When the total value of taxable services in the current month + 11 preceding months exceeds the threshold. |
| Future Method | When the total value of taxable services in the current month + 11 succeeding months is expected to exceed the threshold. |
Once liable, registration must be completed within 30 days using Form SST-01 via the MySST Portal.
Voluntary Registration
A person who provides taxable services but has not yet reached the prescribed threshold may apply for voluntary registration.
This is beneficial for businesses who wish to:
- Issue tax invoices with 6% Service Tax;
- Appear compliant to corporate clients;
- Claim certain input tax credits (where applicable under SST rules).
Once approved, the registered person must comply with all Service Tax obligations, including filing returns and keeping proper records.
Registration of Branches or Divisions
If a registered person operates through multiple branches or divisions, the Director General (DG) may allow each branch/division to be registered separately — provided that:
- a) It is impractical to submit a single return for all branches;
b) Each branch maintains separate accounts;
c) Each branch/division is identifiable by business nature or location; and
d) All branches share the same taxable period.
This helps large organizations manage SST compliance more efficiently.
Service Tax Taxable Period
Each registered person has a defined taxable period for SST filing:
| Filing Frequency | Taxable Period | Form |
| First Taxable Period | Begins from registration date and ends on the last day of the following month | SST-02 |
| Subsequent Periods | Every 2 months (e.g. Jan–Feb, Mar–Apr, etc.) | SST-02 |
| Special Periods | May be approved by DG upon request | SST-02 |
All Service Tax returns must be submitted within one month after the end of each taxable period.
📌 Example:
For the taxable period July–August 2024, SST-02 must be submitted by 30 September 2024.
Penalty for Late Submission or Payment
If Service Tax is not paid by the due date, a penalty applies as follows:
| Period After Due Date | Penalty Rate | Maximum Penalty |
| First 30 days | 10% | |
| Second 30 days | Additional 15% | |
| Third 30 days | Additional 15% | 40% total |
After 90 days, the total penalty is capped at 40% of the unpaid amount.
Failure to comply may also result in prosecution under the Service Tax Act 2018.
Cessation and Cancellation of Registration
1️⃣ Cessation of Liability
A registered person must notify the DG within 30 days if:
- The business ceases to provide taxable services; or
- The total value of taxable services in the current + next 11 months falls below RM500,000.
2️⃣ Cancellation of Registration
The DG may cancel a Service Tax registration if:
- The person ceases business;
- The person fails to provide taxable services after voluntary registration; or
- The company is dissolved.
Once cancelled, no Service Tax may be charged, and any outstanding tax must be settled immediately.
Key Takeaways
- Registration is mandatory once RM500,000 threshold is reached.
- Voluntary registration is allowed for below-threshold businesses.
- Each branch can register separately with DG’s approval.
- Filing period is bimonthly via Form SST-02.
- Penalty up to 40% for late payment.
- Notify DG within 30 days of cessation or business closure.
ANC Group – Your Personal Tax Advisor
Tax consulting is the core service of ANC Group. Our tax professionals provide clients with comprehensive tax support and guidance. We offer tax consulting and compliance services for expatriates, entrepreneurs, and listed and non-listed companies.
Our tax consulting services include business tax, transaction tax, personal tax, and corporate income tax. We don’t just guide you in interpreting and applying complicated taxation rules, but to explore new opportunities and business trends.
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We work closely with industry specialists, authorities, and associated professionals within ANC Group to provide the best-in-class integrated tax planning solutions. ANC specialists coordinate the accounting and taxation services to bring your business to success.
If you need professional tax advisory services regarding the Malaysia Income Tax Act 1967, our team is ready to assist you. Contact us here to discuss how we can support your business.
