Malaysia’s Sales and Service Tax (SST) continues to evolve, and businesses need to keep up with changes to ensure that the correct tax treatment is applied to their sales and accounting records.
In August 2026, the Royal Malaysian Customs Department (RMCD) published two important amendments relating to Sales Tax:
- Sales Tax (Goods Exempted From Sales Tax) (Amendment) Order 2026
- Sales Tax (Rate Of Sales Tax) (Amendment) Order 2026
Both were listed on the MySST portal on 11 August 2026.
While these changes may appear technical, they can have a direct impact on how businesses classify their products, charge sales tax and maintain their accounting records.
What Are the August 2026 SST Updates?
The August updates relate specifically to the sales tax treatment of goods.
One amendment concerns the list of goods that are exempted from sales tax, while the other concerns the applicable sales tax rates.
For businesses involved in manufacturing, importing or selling taxable goods, these changes make it important to review whether the products they deal with continue to receive the same tax treatment.
Businesses should not rely solely on previous tax codes or historical invoices when determining the current SST treatment of a product.
Why Should Businesses Pay Attention?
Incorrect SST treatment can result in several problems.
For example, a business may:
- Charge sales tax when the goods are actually exempt;
- Fail to charge the applicable sales tax;
- Apply an incorrect sales tax rate;
- Use outdated product or tax codes in its accounting system;
- Report incorrect figures in SST returns; or
- Have differences between sales records, invoices and SST records.
These issues can become more complicated when a business has a large number of products or frequently changes its product range.
What Should Businesses Review?
1. Review Your Products
Businesses should review the goods they manufacture, import or sell and determine whether their SST treatment has changed.
This is particularly important for businesses that deal with multiple product categories.
A proper product-by-product review can help identify whether an item is:
- Subject to sales tax;
- Exempt from sales tax; or
- Subject to a different sales tax rate.
The MySST portal provides the relevant sales tax orders and industry guidance for businesses to refer to when determining the applicable treatment.
2. Check Your Sales Tax Rates
Businesses should ensure that the rate used in their invoices and accounting systems agrees with the latest applicable rules.
An outdated rate in an accounting or invoicing system can result in repeated errors across multiple transactions.
It is therefore advisable to review:
- Invoice templates;
- Accounting software;
- Point-of-sale systems;
- Product master data;
- SST tax codes; and
- Pricing calculations.
3. Review Exempt Goods
Businesses should also check whether any goods previously treated as taxable are now covered by an exemption, or whether the exemption treatment has changed.
The August 2026 amendment specifically updates the list of goods exempted from sales tax.
Where an exemption applies, businesses should ensure that the relevant supporting documents and records are properly maintained.
4. Check Your Accounting Records
SST compliance is not limited to issuing the correct invoice.
The sales recorded in the accounting system should also be consistent with the SST records and returns submitted to RMCD.
Businesses should consider performing a reconciliation between:
Sales Ledger → Invoices → SST Records → SST Return
Any significant difference should be investigated before the SST return is submitted.
5. Review Your Pricing
For businesses that charge sales tax to customers, changes in the applicable tax treatment can affect the final selling price.
If a product moves from one tax treatment to another, businesses should review whether their pricing, quotations and customer invoices need to be updated.
This is especially important for businesses operating with fixed-price quotations or long-term contracts.
What About Service Tax?
It is important to distinguish Sales Tax from Service Tax.
The August 2026 amendments highlighted above relate to Sales Tax. Service Tax has separate rules concerning taxable services, registration thresholds and applicable rates.
Currently, MySST states that the general Service Tax rate is 8%, while F&B, logistics, telecommunications and parking services are subject to 6%, subject to the applicable rules.
Therefore, businesses should identify whether their transactions fall under Sales Tax, Service Tax or neither before determining their SST obligations.
Common SST Mistakes Businesses Should Avoid
Some common mistakes include:
❌ Using an outdated SST rate
Tax rates and classifications can change, so historical treatment should not automatically be applied to current transactions.
❌ Assuming all products are taxable
Some goods may fall within specific exemption provisions.
❌ Assuming all products are exempt
An exemption should be supported by the relevant legislation and applicable conditions.
❌ Failing to update accounting software
Even if management is aware of an SST change, the correct treatment may not be reflected in the invoicing or accounting system.
❌ Not reconciling SST records
Differences between accounting records and SST returns can create unnecessary compliance issues.
What Should Businesses Do Now?
Businesses should take the August 2026 updates as an opportunity to perform a basic SST compliance review.
A useful checklist would be:
☑ Review the latest Sales Tax (Rate of Sales Tax) Order
☑ Review the latest Sales Tax (Goods Exempted From Sales Tax) Order
☑ Identify products affected by the amendments
☑ Confirm the correct SST treatment for each affected product
☑ Update accounting and invoicing systems
☑ Review pricing and quotations where necessary
☑ Check supporting documents for exempt transactions
☑ Reconcile sales records against SST records
☑ Ensure SST returns are prepared using the correct information
Final Thoughts
SST compliance is an ongoing process. Businesses should not assume that the tax treatment applied in previous periods will always remain unchanged.
The August 2026 amendments to the Sales Tax exemption and rate orders are a good reminder for businesses to periodically review their products, tax codes, invoices and accounting records.
Taking the time to review these areas early can help businesses reduce billing errors, improve the accuracy of their SST returns and maintain better tax compliance.
Need help reviewing your SST treatment or accounting records?
Our team can assist businesses in reviewing their accounting records and identifying areas that may require further attention for SST and tax compliance.