SST on Imports: How Malaysia's Sales & Service Tax Applies to Your Incoming Goods (2026 Rates & Exemptions)

If you import goods into Malaysia, the Sales and Service Tax (SST) is one of the most significant costs sitting between your purchase price and your actual landed cost. Yet it remains one of the most misunderstood. Importers routinely confuse Sales Tax with Service Tax, miss out on exemptions they qualify for, or discover unexpected charges at customs clearance because SST was never factored into their cost calculations.

This guide breaks down exactly how SST works on imported goods in Malaysia, the rates you will pay in 2026, the exemptions available, and how to calculate your total tax liability before your cargo even leaves the port of origin.

What Is SST and How Did It Replace GST?

Malaysia's Sales and Service Tax (SST) replaced the Goods and Services Tax (GST) on 1 September 2018. While GST was a broad-based, multi-stage consumption tax with an input tax credit mechanism, SST is a single-stage tax system comprising two distinct components:

• Sales Tax (ST) — levied on taxable goods manufactured in Malaysia and on taxable goods imported into the country. It is a single-stage tax, meaning it is charged once: either at the point of manufacture (for domestic goods) or at the point of customs clearance (for imports).
• Service Tax (SvT) — levied on prescribed taxable services provided by registered service providers. This includes certain logistics-related services that directly affect supply chain costs.

The critical difference from GST is that SST has no input tax credit mechanism. Under GST, businesses could offset tax paid on inputs against tax collected on outputs. Under SST, once you pay the tax, it becomes a hard cost. This makes it even more important to understand which rates apply to your goods and which exemptions you may qualify for.

How Sales Tax Is Levied on Imported Goods

For importers, Sales Tax is collected at the point of customs clearance. When your goods arrive at a Malaysian port or airport, JKDM (Jabatan Kastam Diraja Malaysia) assesses and collects Sales Tax alongside import duty as part of the customs declaration process.

The tax is calculated on the assessable value of the goods, which is not simply the invoice price. The assessable value is determined as follows:

Assessable Value = CIF Value + Import Duty

Where CIF stands for Cost, Insurance, and Freight — the total value of the goods including the purchase price, insurance premium, and freight charges to the Malaysian port of entry. The import duty is then calculated on the CIF value based on the applicable tariff rate for the goods' HS code. Sales Tax is then applied on top of both.

This layered calculation means Sales Tax is effectively a tax on a tax — you pay Sales Tax on an amount that already includes import duty. For goods with high duty rates, this compounding effect can significantly increase your total landed cost.

The Calculation Formula

The full formula for Sales Tax on imports is:

Sales Tax = (CIF Value + Import Duty) x Sales Tax Rate

And your total taxes at the border are:

Total Border Taxes = Import Duty + Sales Tax

Sales Tax Rates in 2026

Malaysia operates a tiered Sales Tax rate structure. The rate applied to your goods depends on their classification under the Customs Tariff:

The 10% rate is the default and applies to most manufactured goods imported into Malaysia. If your goods do not fall into one of the reduced-rate or exempt categories, assume 10% applies. The 5% rate is targeted at goods the government considers essential or semi-essential, and the list of goods qualifying for this rate was expanded significantly in July 2025.

The SST Expansion of July 2025

The most significant change to Malaysia's SST landscape in recent years took effect on 1 July 2025, when the MADANI Government brought over 4,800 goods and services into the SST net. This was the broadest expansion of indirect taxation since SST replaced GST. For a detailed breakdown of these changes and their impact on importers and manufacturers, see our comprehensive guide to SST and compliance changes.

What Changed for Importers

Previously exempt goods were reclassified as taxable at either 5% or 10%. The sectors most affected include:

• Food and beverages: Premium seafood (king crab, salmon), essential oils, and certain processed food items now attract Sales Tax. However, following public feedback, the government added select imported fruits (apples, oranges, mandarin oranges, and dates) back to the exempt list.
• Building and construction: Certain building materials and hardware previously exempt are now taxable at 5%, increasing project costs for construction companies relying on imported materials.
• Consumer discretionary goods: Premium fabrics, antique artwork, racing bicycles, and similar non-essential items were brought into the 5-10% tax brackets.
• Services: The Service Tax scope expanded to include leasing and rental, construction services, financial services, private healthcare, education (for foreigners), and beauty services.

A grace period from 1 July to 31 December 2025 allowed businesses to work toward compliance without penalties. Full enforcement began on 1 January 2026, meaning non-compliance now carries real consequences including backdated tax liabilities, fines, and potential prosecution.

Schedule C Exemption: A Lifeline for Manufacturers

For manufacturers who import raw materials, components, or packaging materials for use in their manufacturing process, the Schedule C exemption under the Sales Tax (Persons Exempted from Payment of Tax) Order 2018 is the single most important tax relief available.

What Schedule C Covers

Schedule C allows registered manufacturers to import or purchase the following items exempt from Sales Tax:

• Item 1: Raw materials, components, and packaging materials (excluding petroleum) used directly in the manufacture of taxable goods
• Item 2: Raw materials, components, and packaging materials used in the manufacture of non-taxable (exempt) goods
• Item 3: Manufacturing aids, machinery, and equipment used in the manufacturing process
• Item 4: Goods imported or purchased by specific classes of traders for re-export or resale

Who Qualifies

To qualify for Schedule C exemption, you must be a registered manufacturer under the Sales Tax Act 2018. This means your business manufactures taxable or non-taxable goods and has either exceeded the RM500,000 annual sales threshold or has voluntarily registered with JKDM.

How to Apply

1. Register on MySST: If not already registered, create an account at mysst.customs.gov.my and complete your manufacturer registration.
2. Submit exemption application: Download the relevant Schedule C application format from the MySST portal's Exemption Application section. Complete the form with details of the goods to be imported, HS codes, quantities, and the manufacturing process they will be used in.
3. Provide supporting documents: Include your manufacturing licence, bill of materials, purchase orders or contracts, and production records demonstrating how the imported materials will be consumed.
4. Await approval: JKDM reviews the application. Processing typically takes 3 to 4 weeks, though complex cases may take longer.
5. Generate certificate: Once approved, log in to MySST and generate the exemption certificate using the appointment approval number provided by customs.

Validity and Renewal

Exemption certificates under Items 1 and 2 have no expiry date — once granted, the exemption remains valid indefinitely, provided the manufacturer continues to meet all conditions. Certificates under Items 3 and 4 may have specific validity periods and require renewal before expiry. Applications for C3 and C4 certificates are typically based on purchase orders, contracts, or estimated purchase quantities for a period of three months or less.

Schedule C exemption must be approved BEFORE the cargo arrives in Malaysia. If your goods clear customs without an approved exemption, you will pay full Sales Tax with no retrospective refund. Plan your applications weeks in advance of each shipment.

Other Exemptions: Schedules A, B, and Special Arrangements

Schedule A — Exempt Goods

Certain categories of goods are exempt from Sales Tax regardless of who imports them. The Sales Tax (Goods Exempted from Tax) Order 2025 lists these items, which include:

• Basic food: Rice, flour, sugar, salt, bread, cooking oil, fresh vegetables, local fruits, eggs, poultry, fish, and seafood
• Medical supplies: Pharmaceutical products, medicines, and medical devices
• Printed materials: Books, newspapers, and educational publications
• Agricultural inputs: Certain fertilisers, seeds, and animal feed
• Bicycles (standard, not racing)
• Perishable goods meeting specific criteria

If your imported goods fall into the Schedule A exempt list, no Sales Tax is payable at customs clearance. However, import duty may still apply depending on the HS code classification.

Schedule B — Exempt Persons

Certain classes of persons are exempt from paying Sales Tax on their imports, regardless of the goods' taxable status. These include:

• The Yang di-Pertuan Agong and Rulers of States
• Federal and State Government departments
• Local authorities
• Diplomatic missions and consular offices
• Public higher education institutions
• Duty-free shop operators (for goods sold within duty-free zones)

Temporary Import Exemption

Goods imported temporarily into Malaysia — for example, exhibition equipment, professional tools, or samples — may qualify for temporary import exemption. The goods must be re-exported within a specified period (typically 3 to 6 months), and a security deposit or bond is usually required to guarantee re-export.

Re-Export Exemption

Goods stored in bonded warehouses, free zones, or Licensed Manufacturing Warehouses (LMW) are not subject to Sales Tax or import duty until they enter Malaysia's domestic market. If the goods are re-exported without entering domestic circulation, no Sales Tax is payable. This arrangement is particularly valuable for regional distribution operations based in Malaysia.

Service Tax on Logistics Services

Beyond Sales Tax on the goods themselves, importers need to account for Service Tax on logistics services. Since March 2024, logistics services in Malaysia have been subject to Service Tax at 6%. The taxable logistics services include:

• Logistics management
• Warehousing and warehousing management
• Freight forwarding services
• Port and airport management services
• Customs agent services
• Courier and delivery services
• Transportation and haulage
• Cold chain services

While the standard Service Tax rate for most services increased to 8% from 1 March 2024, logistics services were kept at the lower 6% rate to protect supply chain costs and avoid excessive burden on trade-dependent businesses.

This means that when you receive invoices from your forwarding agent, warehouse operator, or haulage provider, expect a 6% Service Tax charge on top of their service fees. This adds to your total landed cost and should be factored into your import cost calculations from the outset. For strategies on managing these costs, see our guide to cutting logistics costs in Malaysia.

How SST Is Paid at the Border

Sales Tax on imported goods is collected by JKDM at the point of customs clearance, alongside import duty. Here is how the payment process works:

Standard Payment Process

1. Declaration: Your forwarding agent submits the customs declaration (K1 form) via the customs system, declaring the goods, their value, HS codes, and applicable duty and tax rates.
2. Assessment: JKDM assesses the declaration and calculates the total import duty and Sales Tax payable.
3. Payment: The assessed duties and taxes must be paid before goods are released from customs control. Payment can be made via bank transfer, banker's cheque, or through the forwarding agent who advances the payment on the importer's behalf.
4. Release: Once payment is confirmed, the goods are released for collection or delivery.

Deferment Options

For high-volume importers, JKDM offers certain deferment arrangements:

• Bonded warehouses: Goods can be stored in approved bonded warehouses without paying duty or Sales Tax until the goods are released into the domestic market.
• Free zones: Goods within designated free zones (such as the Port Klang Free Zone) are not subject to customs duty or Sales Tax while they remain in the zone.
• Licensed Manufacturing Warehouses (LMW): Manufacturers with LMW status can import raw materials duty-free and tax-free for manufacturing and re-export.

SST Registration for Manufacturers

If your business manufactures taxable goods in Malaysia, understanding your registration obligations is essential:

Registration Threshold

You are required to register for Sales Tax if your annual sales value of taxable goods exceeds RM500,000 in any 12-month period. The registration obligation is triggered when your total sales cross this threshold. You must submit your registration application via the MySST portal by the last day of the month following the month in which you exceeded the threshold.

Obligations Once Registered

• Charge and collect Sales Tax on all taxable goods sold domestically
• Submit SST returns (SST-02) on a bi-monthly basis
• Maintain proper records of all transactions for at least 7 years
• Issue invoices that separately show the Sales Tax charged
• Remit collected Sales Tax to JKDM within the prescribed period

No Input Tax Credit

Unlike GST, SST does not have an input tax credit mechanism. Sales Tax paid on raw materials or inputs cannot be offset against Sales Tax collected on finished goods. This is why Schedule C exemptions are so critical for manufacturers — without them, Sales Tax on inputs becomes a hard cost that is either absorbed (reducing margins) or passed on to customers (reducing competitiveness).

Penalties for Non-Registration

Failing to register when required is a serious offence. Penalties include fines of up to RM30,000, imprisonment, or both. JKDM can also impose backdated tax assessments, charging you the Sales Tax that should have been collected from the date you first exceeded the threshold, plus penalties and interest.

Common SST Mistakes That Cost Importers Money

After 25 years of handling customs clearance at Port Klang, we have seen the same SST mistakes repeated over and over. Here are the most expensive ones:

1. Not applying for Schedule C before goods arrive: This is by far the most costly mistake. Once goods clear customs at the full Sales Tax rate, there is no retrospective exemption or refund. The tax is paid, and it becomes a permanent cost.
2. Misclassifying goods for the wrong rate: Using the wrong HS code can mean paying 10% when you should be paying 5%, or paying tax on goods that are actually exempt. A professional tariff classification review can identify these errors.
3. Not factoring SST into landed cost calculations: Many importers calculate their landed cost based on CIF + duty, forgetting that Sales Tax is calculated on top of duty. For a 10% Sales Tax item with 20% duty, the actual tax burden is significantly higher than it appears at first glance.
4. Confusing Sales Tax with Service Tax: Sales Tax is on the goods. Service Tax is on the logistics services. They are separate charges governed by separate legislation, and mixing them up leads to inaccurate cost projections and financial planning errors.
5. Ignoring the SST expansion changes: Goods that were exempt before July 2025 may now be taxable. If you have not reviewed your product classifications since the expansion, you could be non-compliant without realising it.
6. Failing to register as a manufacturer: If your annual sales exceed RM500,000, you must register. Operating above the threshold without registration exposes you to backdated assessments and criminal penalties.

Worked Examples: SST Calculations for Three Product Types

Let us work through three real-world scenarios to show how Sales Tax is calculated on different types of imports.

For a quick way to estimate your own import costs, try our import duty and SST calculator guide.

How DNE Forwarding Helps You Navigate SST

At DNE Forwarding, we handle customs clearance at Port Klang every day. SST compliance is not a side activity for us — it is core to the service we provide. Here is how we help importers and manufacturers manage their SST obligations:

• SST advisory: We assess your imports against the current SST schedules and advise on applicable rates, exemptions, and the most tax-efficient way to structure your shipments.
• Schedule C application support: We guide manufacturers through the entire Schedule C application process — from documentation preparation to MySST submission — and ensure approvals are in place well before cargo arrives.
• Accurate duty and SST calculations: Every customs declaration we submit includes precise HS code classification and tax computation. No surprises at the border.
• Exemption identification: We proactively review your product lines against Schedules A, B, and C to identify exemptions you may not know you qualify for. Savings we find for one shipment compound across every shipment that follows.
• Tariff classification review: Incorrect HS codes are the single biggest source of overpaid duty and SST. Our licensed customs agents review every classification to ensure accuracy and minimise your tax exposure.
• End-to-end clearance: From documentation to declaration to duty payment to haulage, we manage the entire process under one roof — eliminating the handoff errors and delays that occur when multiple service providers are involved.

Whether you are importing raw materials for manufacturing, finished goods for retail, or machinery for your production line, getting SST right from the start saves you money on every single shipment.