In this article, our VAT registration lawyers in Malaysia answer some of the most commonly asked questions, useful for clarifying the need to register for VAT in Malaysia. It is good to note that VAT registration in Malaysia is a process that includes several steps, starting with determining if the company exceeds the applicable threshold and following the standard application process with the Customs Office, matters that can be properly managed by one of our local specialists.
| Quick Facts | |
|---|---|
| We offer VAT registration services | Yes |
|
Standard rate |
6% |
|
Lower rates |
5% for: – basic foodstuffs; – petroleum oils; – construction materials; – IT, telecommunications and printing hardware and materials |
| Who needs VAT registration | Companies with an annual turnover over RM 500,000 |
| Time frame for registration | 24 hours pre-approval |
| VAT for real estate transactions |
Not applicable |
| Exemptions available |
For: – export of goods, – processed foods, – electrical appliances, – furniture |
| Period for filing |
Two calendar months |
| VAT returns support |
Yes |
| VAT refund | Available for natural persons and business entities |
| Local tax agent required | Yes |
| Who collects the VAT |
– retailers, – manufacturers, – wholesalers |
| Documents for VAT registration |
– certificate of incorporation, – standard forms |
| VAT number format |
MY country code letters followed by 15 digits |
| VAT de-registration situations |
When companies close their operations |
Table of Contents
Malaysian VAT registration for a foreign company
Foreign companies must comply with local rules for VAT registration in Malaysia. There are a number of formalities that can be explained to you by our Malaysian lawyers, and below we review some of them:
- Voluntary Malaysian VAT registration for a foreign company is also allowed if taxable products are below the threshold imposed.
- The Certificate of Registration, alongside the Articles of Association, is among the necessary documents for VAT registration in Malaysia. A VAT Certificate from the country of origin is also needed.
- There is no obligation of having a fiscal representative for Malaysian VAT registration for a foreign country, however, it is recommended. He or she can properly manage the formalities, as these might seem complex. One of our local tax advisors can provide support.
- Once the documents have been sent, the tax authorities proceed to verify them, and then issue the VAT code if they are in order.
We remind you of the support of our lawyers in Malaysia if you apply for Malaysian VAT registration for a foreign company. It is advisable to request legal advice in this matter to ensure a simple and error-free process. Please explore this infographic with info on this topic:
VAT registration for a local company in Malaysia
Our lawyers in Malaysia, specialized in VAT registration, describe the main steps for local companies:
- Determine if the business is subject to tax: the first step is to answer the simple question if the business is a manufacturing one that is subject to this tax.
- Determine the threshold: this is important as it will dictate whether or not registration is mandatory or voluntary.
- Submit the application: the Registration Application for Sales Tax or Service Tax is filled in and submitted to the authorities.
- Verification: the application is subject to verification from a Customs Officer who may request additional supporting documents.
- Approval: once the verification is complete, the report is forwarded to the Approval Officer, who will issue the “registered” or the “rejected” status.
- Receive the result: the result, whether approved or rejected, is transmitted via email or through the online portal.
- Subsequent steps: if a company receives its registration, it also receives the login information for the MySST portal, where the company representative will update the company information.
One of our VAT registration attorneys in Malaysia can assist investors who need to go through this process in 2026. We can provide additional details on the registration procedure and the steps in the event that the initial SST registration application is rejected. Investors who need more information about the actual process can reach out to us.
In case you need other types of services, such as debt recovery assistance, we can handle these cases too. And if you need this type of service in another country, for example, in Poland, our partners can help you recover owed money or assets from clients or business partners.
How is the VAT applied in Malaysia?
The Malaysian VAT/SST system is largely modeled on the UK VAT. Primarily, the VAT/SST is a consumption tax on goods and services. The main concept of VAT in Malaysia is that only the value added to goods or services is going to be taxed. The VAT system is projected to make sure that the VAT price is ultimately paid by the final consumer and that it is not an additional burden for companies in the value chain.
Mandatory and voluntary registrations are available, and the latter applies in case of taxable goods that are below the threshold or in case of persons who were exempt from registration but choose to undergo this step. The turnover for the 12-month period can be calculated based on the past value of the taxable goods or according to a future projection. We remind the support of our local specialists for VAT registration in Malaysia.
What types of businesses are subject to VAT?
The type of supplies that are liable to the standard VAT rate in Malaysia are local supplies of goods and services that are not rated at a zero VAT taxation, exempt, or granted relief, as well as imported goods and services. In general, companies are liable for VAT registration in Malaysia; however, in some cases, they are exempt from registration. Businesses to which this rule applies are the following:
- companies that manufacture non-taxable goods;
- a manufacturing company that is situated below the registration threshold;
- a sub-contractor manufacturer to which the registration threshold applies;
- manufacturing companies that are expressly exempt from registration, such as those in the tailoring field, opticians, jewelers, and others.
Our lawyers in Malaysia can offer more information on the general registration requirements as well as the exemption from registration. In some cases, manufacturers who were already registered for GST purposes or those who have been identified as subject to this registration may be subject to an automatic process. This means that they will be automatically registered as a Manufacturer under the Sales Tax. Feel free to talk to our experts about VAT registration in Malaysia. Below is an infographic with information on this topic:
VAT invoice content in Malaysia
As soon as you have done VAT registration in Malaysia, you can carry out the company’s activities and issue invoices. Such an invoice must include the following information:
- the name and business address of the company, as well as the unique identification number;
- VAT ID issued by the authorities;
- invoice number and date;
- description of the products and services offered for sale;
- the price of products and/or services without VAT;
- the price of products and/or services with VAT included;
- VAT rate depends on the category of products and/or services;
- total amount due.
Tax software is necessary for issuing such an invoice, and any company should implement the necessary systems before starting activities. We emphasize once again that you can benefit from the support of our local specialists for VAT registration in Malaysia and the formalities imposed in this matter.
VAT for digital products and services in Malaysia
The VAT rate for digital products and services in Malaysia is 6%, and those who offer them are required to register to pay this tax. Streaming music, e-books, cloud-based software, site hosting services, and online ads are among the digital products subject to taxation in this country. In other words, if this type of product is sold in Malaysia, then this tax will apply.
However, if the digital products are sold to other companies (B2B), there is the option of reverse-charge in order to no longer impose this fee on customers of this type. We remind you that our tax lawyers in Malaysia can help you with the registration for VAT if you are thinking of opening a business.
The 10% SST rate is not deductible by taxpayers. Considering this information, one should note that this rule refers to the liability on imported products, where a low value might apply in certain conditions.
SST rates and exemptions
Any type of goods manufactured in the country that are intended for export purposes are exempt from the sales tax. In addition to these, certain types of goods are also exempted from SST. These are the following:
- live animals, fish, and seafood, as well as essential foodstuffs;
- books, magazines, periodicals, journals;
- bicycles align with some parts and accessories;
- natural mineral substances, chemicals, pharmaceuticals, fertilizers;
- articles produced by a goldsmith, among which certain types of jewelry.
One of our lawyers in Malaysia can give you more information about zero-rating and how these types of companies are still entitled to claim input credit, something that is not available to exempt suppliers of goods and services. There are certain exemptions to VAT in Malaysia. These are the following:
- financial services;
- sale and lease of residential real estate also applied to land;
- toll highway;
- private education and healthcare;
- local public transport;
- land for agricultural purposes and land for burial, playground, or religious building purposes.
In Malaysia, there are certain items that a registered business set up in this country is not able to recover VAT on. These items are:
- supply or import of passenger vehicles;
- hiring passenger vehicles;
- repairs, maintenance, and renovation costs in connection with a passenger vehicle;
- club subscription fee;
- medical and personal accident insurance premiums;
- medical expenses;
- family benefits;
- entertainment expenses, with the exception of current customers’ or employees’ entertainment ones;
- costs connected to effectuating exempt supplies.
We invite you to watch the following video on VAT in Malaysia:
What are the requirements for SST payment and filing?
The taxable period for the SST is bimonthly. The Royal Customs Department is the one in charge of the SST administration in the country. The tax returns are filed and paid according to the accounting period. The return is submitted electronically, and the payments are made in the same portal; there are several options for payment, including bank payments or check payments when these are processed manually and not through the online portal. A maximum amount for payments applies to online submissions.
Penalties can be imposed in the following cases: when there are deficiencies in the payable net tax, when no SST return is submitted, when the return is submitted without payment or with insufficient payment, or when the company fails to register. The penalties for late payment are 10% and 15%, depending on the time that has elapsed since the first 30-day period after the payment was due.
VAT updates for 2026
Like many other countries, Malaysia has revised its VAT legislation. Here are some changes for 2026 to keep in mind if you have a business in Malaysia:
- Starting in 2026, sales tax exemptions on raw materials for agricultural and livestock products were introduced in Malaysia.
- The service tax for rental/leasing properties in Malaysia was reduced from 8% to 6%.
- Another novelty is the fact that the SST exemption for non-reviewable construction contracts is extended until June 30, 2027.
- Malaysia will introduce a new carbon tax for the steel, iron, and energy sectors in 2026.
- The implementation of electronic invoicing in Malaysia has begun. This type of invoicing is now mandatory for the sale of domestic services, e-commerce, and employee-related costs.
Besides assistance in VAT registration in Malaysia, our experts can help in other matters too. For example, our corporate lawyer in Malaysia can provide in-depth support for business-related aspects. On the other hand, foreigners interested in immigration to Malaysia can discuss with our local team. We can also manage the formalities for getting citizenship in Malaysia. Feel free to contact our law firm in Malaysia and discover our personalized services at affordable prices.