Malaysia SST: Companies Must Charge 6% Service Tax on Transportation

Published: 10 Oct 2025

A New Compliance Requirement for Retail and Other Businesses

Effective from 26 February 2024, the Royal Malaysian Customs Department (RMCD) has implemented a key revision under the Service Tax (Amendment) Regulations 2024 (P.U.(A) 62/2024), which will affect businesses charging transportation fees to customers.

Case Study for Your Reference

The following example illustrates how a Malaysian company like AAC is impacted by the Service Tax (SST) of 6% on transportation charges.

About AAC

AAC is a retail company that also provides transportation of goods as part of its services to clients. These transportation charges, previously not subject to Service Tax, will now fall under the scope of taxable services under Group J – Logistics Services as defined in the Service Tax (Amendment) Regulations 2024.

What Changed?

Logistics and transportation services (including delivery of goods within Malaysia) are subject to 6% SST, provided that:

• The service is listed under Group J – Logistics Services, and
• The provider’s total taxable revenue from such services exceeds RM 500,000 annually.

Why AAC Is Required to Charge 6% SST

Based on AAC’s internal records, the transportation revenue in 2024 amounted to RM 1.8 million, which exceeds the RM 500,000 threshold. As a result, AAC is required to register for service tax and begin charging 6% on transportation services from 26 February 2024.

Financial Summary	2023 (RM)	2024 (RM)
Total Revenue	110,000,000	140,000,000
Transportation Charges	1,600,000	1,800,000
Discount Allowances	170,000	190,000
Return Inwards	2,700,000	4,880,000

Note: The RM1.8 million transportation revenue in 2024 clearly exceeds the RM500,000 threshold set under Group J – Logistics Services, hence subject to 6% SST.

Service Tax Calculation

Scenario	Formula	SST Amount (RM)
1. Charge to Customer (6%)	RM 1,800,000 × 6%	RM 108,000
2. Absorb SST (Inclusive Price)	RM 1,800,000 × (6 ÷ 106)	RM 101,886.79

If AAC charges SST to customers, the invoice will show RM 1,800,000 + RM 108,000.
If AAC absorbs SST, the RM 1.8 million includes tax, and RM 101,886.79 must be remitted to the RMCD.

What Is Group J – Logistics Services?

Group J covers logistics-related services prescribed as taxable, including:

• Transportation of goods by road, rail, sea, or air
• Freight forwarding
• Courier and express delivery
• Warehousing and distribution

As AAC charges customers for goods transportation, and the revenue exceeds RM 500,000 annually, it is subject to SST compliance.

Action Steps for AAC and Similar Businesses

1. Register for Service Tax with RMCD (if not already registered).
2. Apply 6% SST on transportation charges immediately.
3. Update invoicing systems to include SST line item or inclusive breakdown.
4. Decide whether to absorb or pass on the SST to customers.
5. Communicate clearly with customers about pricing adjustments.

References

• Service Tax (Amendment) Regulations 2024 (P.U.(A) 62/2024)
• Service Tax Policy No. 4/2024

For more detailed compliance or application steps, consult the RMCD’s guidelines or your licensed tax advisor.

⚠️ Need Help?

YYC’s tax professionals are ready to guide your business through this SST expansion with:

• ✅ SST Registration & Readiness Review
• ✅ SST Classification of Goods & Services, & B2B exemption/ intragroup relief
• ✅ Custom ruling / Sales tax exemption application
• ✅ Internal SST Training for Finance Team
• ✅ Ongoing SST Compliance Consultation

Book a consultation with YYC today and ensure your business is 100% SST-ready.