How to Calculate Import Sales Tax (SST) in Malaysia

When importing taxable goods into Malaysia, what you pay at clearance is not only duty but also Sales Tax (the Sales Tax portion of SST). Under the Sales Tax Act 2018 (Act 806), Sales Tax is a single-stage tax charged on taxable goods manufactured locally and on taxable goods imported for domestic consumption, at a rate of 5%, 10%, or a specific rate (for petroleum products). Import-stage Sales Tax is collected by the Royal Malaysian Customs Department (RMCD) when the goods are cleared — the key point being: the importer does not need to separately register for Sales Tax; the tax is paid at clearance together with duty.

How the import SST tax base is calculated

The sales value of imported goods is not just the value of the goods; it stacks the taxes and charges layer by layer. The tax-base formula:

Sales Tax = (CIF customs value + import duty + (if applicable) excise duty) × Sales Tax rate

Mind the order: calculate duty first, then add the duty into the tax base to calculate Sales Tax. The two have different bases, and you cannot simply multiply CIF by the combined percentage of duty plus Sales Tax. Getting the HS code wrong will get both duty and Sales Tax wrong together.

Rate: 5%, 10%, or a specific rate

Which band applies to your goods depends on their classification under the Sales Tax (Rate of Tax) Order:

• 10%: the standard rate for general taxable goods.
• 5%: specific categories listed in the legislation (such as certain food ingredients and basic necessities) enjoy the lower rate.
• Specific rate: petroleum products use a fixed amount per unit.
• Exempt (0%/tax-free): many basic necessities and specific raw materials are on the exemption list, or exemption on raw materials can be applied for by a qualified manufacturer.

To confirm whether your product is 5%, 10%, or exempt, you must go back to the goods' HS code to check against the Sales Tax rate schedule — you cannot apply 10% across the board.

Who pays, and when

Sales Tax on imported taxable goods is paid at customs clearance, and is legally charged and collected "as if it were duty or excise duty." That is, the importer pays Sales Tax at the same time as paying duty at declaration, and does not need to register as a Sales Tax registrant for this. By contrast, a local manufacturer only needs to register and file Sales Tax on its finished goods if its annual turnover reaches the threshold.

The new Low Value Goods (LVG) regime (small online cross-border purchases)

Small air parcels used to enjoy tax exemption, but from 1 January 2024, Malaysia charges 10% Sales Tax on imported Low Value Goods (LVG) that are sold online at a price not exceeding RM500, collected at the point of sale by the overseas/online seller. Key points:

• Scope: imported goods sold to Malaysia through an online platform, priced ≤ RM500 per item.
• Rate: 10%.
• Seller registration threshold: sellers whose total LVG sales exceed RM500,000 within 12 months must register as an LVG registered seller with Customs and file and pay the tax.
• Purpose: to make the tax burden on small cross-border goods consistent with local goods.

Common mistakes

• Multiplying CIF directly by the total rate: missing the order in which "duty must be folded into the Sales Tax base first," resulting in an understated tax.
• Treating everything as 10%: not checking whether the product qualifies for 5% or is on the exemption list.
• Thinking imports require Sales Tax registration: import-stage Sales Tax is paid at clearance and needs no registration; the misunderstanding delays the process.
• Ignoring the LVG regime: small online sellers assume exemption, then fail to register upon reaching the threshold and get penalized.
• HS misclassification cascading into wrong tax: wrong code, and both duty and Sales Tax are wrong.

Frequently asked questions (FAQ)

Q: What percentage is import Sales Tax? The standard is 10%, specific categories are 5%, petroleum is a specific rate, and there is also an exemption list. Which band actually applies depends on the Sales Tax rate schedule corresponding to the goods' HS code.

Q: How is the Sales Tax base determined? The sales value is CIF customs value + import duty (+ excise duty if applicable), then multiplied by the rate. Be sure to calculate duty first, fold the duty into the base, then multiply by 5% or 10%.

Q: Does the importer need to register for Sales Tax? No. Sales Tax on imported taxable goods is paid at clearance like duty, and the importer does not need to register as a Sales Tax registrant for this.

Q: Are small cross-border e-commerce parcels still tax-exempt? From 1 January 2024, imported low value goods sold online at a price ≤ RM500 are subject to 10% Sales Tax; sellers with annual LVG sales exceeding RM500,000 must register and file.

Q: Is there an order between duty and Sales Tax? Yes. First calculate import duty from the HS code, then fold the duty into the base to calculate Sales Tax; both are paid together at clearance.

Self-check checklist

• [ ] Confirmed the Sales Tax rate (5% / 10% / exempt) corresponding to the product's HS code
• [ ] Calculated the tax base in the correct order: CIF + duty (+ excise duty)
• [ ] Listed duty and Sales Tax separately so they can be reconciled
• [ ] Checked whether small online cross-border goods fall under the 10% LVG regime
• [ ] For those with annual LVG sales approaching RM500,000, assessed the registration obligation

Summary: The keys to import Sales Tax are the "tax-base stacking" and the "rate band" — duty first, then Sales Tax, with the rate depending on the HS code; for small online goods, remember the LVG regime from 2024. Get the HS classification right and both duty and SST can be calculated correctly the first time.

Further reading: HS Codes and import duty classification, Malaysia customs clearance process and documents overview, The Approved Permit (AP) system: which goods need an AP.

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This article is compiled from official sources and is for reference only; actual compliance is subject to the latest official texts and review by the competent authorities.