With the growing use of global digital platforms and online services, many businesses in Malaysia now engage foreign providers for advertising, software, and consultancy. Whether you’re SST-registered or not, it’s important to understand how taxable services and imported taxable services apply to your transactions.
Did you know that all companies are required to declare and pay SST on importation of taxable services regardless of whether SST registrant or not?
As per the latest act dated 11/01/2019, service tax shall be charged and levied to any person—whether registered for SST or not—who, in carrying on his business, acquires any imported taxable service at the rate of 6%.
For example, your business may not be SST-registered, yet if you purchase advertising services from Google or Facebook, you are still required to declare and pay the service tax. This is because such services are considered imported taxable services, and tax liability applies at the point of consumption, not just registration.
Understanding Taxable and Imported Taxable Services
To clarify, taxable services are services listed under the Malaysian Service Tax Regulations and are subject to a 6% tax. These can include professional services, marketing, IT solutions, and many types of digital tools or platforms.
When these services are provided by a foreign entity and consumed in Malaysia, they become imported taxable services. This means even if a business is not SST-registered, it is still legally obligated to self-assess and remit the 6% service tax directly to the Royal Malaysian Customs Department.
This rule is designed to level the playing field between local and international service providers and to ensure that local consumption of services, regardless of origin, contributes equally to the SST framework.
Real-Life Scenario
Let’s revisit the earlier example. If your business hires Facebook or Google for online ads, and those companies bill you from outside Malaysia, you’re consuming an imported taxable service. Even if no SST is shown on the invoice, your company must still declare and pay the tax.
Failure to do so may result in penalties, especially if these transactions are uncovered during an audit. This makes it crucial for businesses—especially those frequently using foreign services—to understand their responsibilities.
How to Comply with the SST Rule?
To apply this rule in your accounting system,
Make sure your software is capable of tracking imported taxable services and computing the appropriate SST. QNE has released system updates specifically to address this need.
Kindly follow this guide to find out how to update your system to the latest version and how to apply this new rule in the database.
You may check out the version of 2018.0.1.5 for the changes.
Estimated Release Date: 31/3/2019
Full Documentation is available at https://goo.gl/u8Z3cG
Once updated, your system will allow you to tag and monitor transactions involving imported taxable services, compute the 6% tax accurately, and generate the necessary reports for submission.
Who Needs to Report?
Every business that receives imported taxable services should review its compliance status. This includes companies that regularly use digital ads, software subscriptions, or online platforms billed from overseas.
You will need to declare these transactions through the MySST portal or via Form SST-02, depending on your registration status. The tax is generally due when payment is made or when an invoice is received—whichever comes first.
Keeping clean and consistent records is essential. Invoices, contracts, and proof of payment serve as supporting documents in the event of a tax review.
Why This Matter?
The concept of taxable services is no longer limited to big corporations or financial firms. Even small businesses, online sellers, and freelancers can be liable if they pay foreign vendors for services that fall under the taxable category.
Being unaware of your obligations doesn’t exempt you from penalties. It’s always better to be proactive, informed, and equipped with a system that helps you stay compliant.
As businesses become more digital and borderless, understanding the treatment of taxable services—especially imported taxable services—is more important than ever. Knowing when and how to report, update your system, and self-declare SST can save your business from unnecessary tax issues and ensure smooth operations.
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