Latest
Changes in SST from Group A to Group M:
What Malaysian Entrepreneurs Need to
Know
Updated: 4 July 2025
Malaysia’s government has recently implemented sweeping
changes to its Service Tax framework, a move that expands the tax base and
alters how businesses across various sectors charge SST (Sales and Service
Tax). Effective 1 July 2025, the amendments are part of a broader tax
reform initiative aimed at increasing fiscal resilience and ensuring equitable
contributions across growing service industries.
These changes - codified under PU(A) 172/2025 - have
significant implications for both registered and previously non-registered
businesses. Below, we break down the changes in a simple “Before vs After”
format, so Malaysian entrepreneurs can easily understand what’s new and how to
prepare.
1. SST Rate Changes
Before:
- Standard
SST rate for taxable services was 8% for all taxable service categories, except for food and beverage, telecommunications
services, car parking space services and logistics services.
After:
- 8%
rate applies to the following new taxable services arising from expansion of Service Tax Scope such as leasing or
rental, financial services.
- The
6% rate remains for essentials like food and beverage, telecommunications services, car parking
space service, and logistics service
and also covering newly introduced taxable
services such as construction, education and private healthcare services.
- Bundled
services - If the providers registered under Group A to E also offer
other taxable services (e.g. food & beverage), they have to charge a different SST rate, either in 6% or 8% on
respective taxable service offered.
📝
Action: Ensure your invoicing and point-of-sale systems can
separate services by rate category.
2. Changes in Group A: Accommodation Services
Before:
- SST
applied to accommodation providers such as hotels, service apartment, homestay, inns and
similar establishments.
- If
these providers also offer other taxable services (e.g. food &
beverage), they have to charge a different SST
rate, either in 6% or 8% on respective taxable service offered.
After (From 1 July 2025):
- Accommodation
providers must now charge service tax on other newly added taxable services
offered within their premises (e.g. earning rental from equipment), even
if not separately registered under other groups.
- Exception:
Services relate to private healthcare service (e.g.
hospital stay), service tax under Group A is not applicable.
📝 Action: Hotels and resorts must stay fully informed on the latest changes related to
Service Tax Expansion and ensure the correct service tax rates are applied to their
offerings when issuing invoices to guests.
3. Changes in Group B: Food & Beverage (F&B)
Services
Before:
- F&B
businesses such as restaurants, cafés, and caterers charged SST on provision of prepared or served foods and
beverages.
- Rental
income from stalls (e.g stall space to food stall operator) was not
taxable.
After:
- Rental
income within the premises (e.g. stall space to food stall operator) is now
subject to SST.
- Group
B providers must also charge SST for other taxable services they provide - except
service offered by private healthcare service operator/service provider.
📝 Action: Registered F&B operators who lease stall space is required
to charge service tax on leasing of stall space with effective from 1 July 2025
regardless the rental income earning from stall space leasing exceeds
RM1,000,000 within a period of 12 months or less.
4. Group
C: Night-Club, Dance Halls, Cabarets, Karaoke Centre, wellness centres, massage
parlours, public houses and beer house
Before:
- Group
C applied to spas, massage parlours, health
and wellness centres, karaoke centres, and nightclubs.
- If
these providers also offer other taxable services (e.g. food &
beverage), they have to charge different SST
rate, either in 6% or 8% on the respective taxable service offered.
After:
- Health and wellness have been replaced with wellness centre.
- The definition of “Wellness Centre” is now provided which:
- Includes beauty treatment service offered by beauty centres, which consist of body hydrotherapy, facial services, tattoo parlours, slimming, postnatal centres, hairdressing, and aromatherapy.
- However, based on the recent media release issued by the Ministry of Finance dated 27 June 2025 ,beauty service (eg: manicure and pedicure; facial services; barbers and hairdressers) is no longer subject as taxable service. Therefore these services is not subject to service tax.
📝 Action: Non-registered wellness, and massage businesses is
liable to register for SST if their value of taxable service is expected to
exceed RM500,000 within a period of 12 months or less in the month August 2025 and
start charging the 8% SST with effective from 1 September 2025.
5. Group D: Private Clubs
Before:
- Private
clubs charging membership fees that cover service offerings or operating
restaurants within the club were subject to SST on services provided to
members.
- Private
clubs must charge SST on any service offered within the private club and any
other taxable service offered in other Groups (e.g. event hosting, rentals,
packages).
After:
- Private
clubs must charge SST on any service offered within the private club and any
other taxable service offered in other Group (e.g. event hosting,
rentals, packages).
- Exception:
Services relate to private healthcare service,
service tax under Group D is not applicable
📝 Action: Private
clubs must stay fully informed on the latest
changes related to Service Tax Expansion and ensure the correct service tax rates are applied to their
offerings when issuing invoices to its members and guests.
6. Group E: Golf Clubs & Driving Ranges
Before:
- SST
applied to season pass, caddy services, coaching services or services related
to golf provided by the golf clubs, other taxable services specified in
other Groups as well as any other service within the golf club or golf
driving range.
After:
- With
the inclusion of leasing or rental services as taxable services, golf
clubs or golf driving ranges are now required to charge SST on the rental
of properties that are located separately from the golf club premises.
📝
Action: Golf clubs need to identify and classify every revenue stream
for SST purposes.
7. Group F: (No significant amendments disclosed)
📝 Note: Group F was
not the focus of recent changes and remains primarily related to betting and gaming taxable services.
8. Group G: Professional and Consultancy Services
Before:
- Included
legal, accounting, engineering, architecture, and consultancy services.
After:
- Several exclusions and reclassifications:
- Financial consultancy, financial management, and financial digital services which relating to financial services are now under Group H (Finance).
- Facility maintenance and management during the construction period is now under Group L (Construction).
📝 Action: Professionals under Group G must take in all prescribed
taxable services under Group G when computing the threshold value of Group G, whether
has exceed/expected to exceed RM500,000 within a period of 12 months or less
and to register for SST under Group G if applicable
9. Group H: Financial Services (Previously Only
Credit/Charge Cards)
Before:
- Only
credit card annual fees (RM25) were subject to SST.
After:
- Now includes:
- Individual insurance (except personal medical/life/family takaful)
- Financial leasing and lending services
- Financial advisory and brokerage
- Digital financial
- Effective date for non-listed services: 1 September 2025.
- Charges for outward remittance which imposed on customer located in Malaysia is now taxable.
Threshold: RM1,000,000 within a period of 12 months or less.
📝 Action: Banks,
insurers, e-wallets, and fintech companies must update fee structures and
prepare for SST audits.
10. Group I: Other service provider
Before:
- Healthcare
services are not regarded as taxable services
After:
- SST now applies to:
- Private healthcare facilities (e.g. private clinics/hospitals) if revenue > RM1.5 million
- Traditional and complementary medicine (TCM)
- Allied health services (e.g. physiotherapy, speech therapy)
Note: SST is only chargeable to non-citizens.
📝 Action: Private clinics who has earnings
more than RM1.5 million for current month+next 11 months (12-month projection) period
must register for SST, regardless the health care service provided to citizen
and non-citizen.
11. Group J: (No major updates disclosed)
📝 Note: Group J was not the focus of recent
changes and remains primarily related to logistics service, courier or
transport services.
12. Group K: Rental or Leasing Services
Before:
- SST
applied only to specific person who are granted license by Public
Transport Act for Penisular Malaysia as well as Commercial Vehicles
Licensing Board Act 1987 for East Malaysia which are under Group I.
After:
- Now applies to rental or leasing of any tangible asset (excluding housing accommodation and financial lease), including but not limited to:
- Commercial property
- Machinery
- Plants and animals
Threshold: RM1,000,000 within a period of 12 months
or less.
📝 Action: Landlords
renting out commercial units must charge 8% SST once threshold is met.
Exceptions include residential rentals and finance leases.
13. Group L: Construction Services
Before:
- Construction
services were never a taxable service.
After:
- All construction services are now taxable except:
- Residential buildings
- Public facilities approved by the local authorities solely as residential buildings (e.g. playground)
- Mixed developments are fully taxable (e.g. shoplots + serviced apartments).
Threshold:
RM1.5 million/year.
📝 Action: Construction
service provider who has earnings more than RM1.5 million inclusive of value of
all taxable construction work and materials, for current month+next 11 months (12-month
projection) period must register for SST.
14. Group M: Education Services
Before:
- Most
education services were SST-exempt.
After:
- SST applies if:
- Private playschools/private preschool until private secondary school as well as tuition centres, international schools, etc which impose fees exceed RM60,000 per student/academic year.
- Private colleges/universities and language centres charge non-Malaysians.
📝 Action:
International schools must assess whether if there is any fees exceed RM60,000
per student/academic year and if there is any, the international school need to
apply registration in August 2025.
Summary of Group-Based SST Changes
Group |
Sector Description |
Key Change |
Threshold |
Rate |
Effective Date |
A |
Accommodation |
Services relate to private healthcare service excluded from taxable service under Group A |
RM500,000 |
6%/8% |
1 July 2025 |
B |
Food & Beverage (F&B) |
Stall space rental now taxable |
RM1,500,000 |
6%/8% |
1 July 2025 |
C |
Wellness & EntertainmentCentre |
Will not be expanded to beauty service (pending MOF’s finalisation of the scope) |
RM500,000 |
6%/8% |
1 July 2025 |
D |
Private Clubs |
Services relate to private healthcare service excluded from taxable service under Group D |
RM500,000 |
6%/8% |
1 July 2025 |
E |
Golf Clubs & Driving Ranges |
Broader scope, more services taxableRent out of commercial property owned by golf club which located separately from golf club premise also taxable. |
RM500,000 |
6%/8% |
1 July 2025 |
F |
Betting and Gaming |
No significant change |
- |
8% |
- |
G |
Professional Services |
Financial consultation services, financial management service, financial digital services moved to Group I |
RM500,000 |
8% |
1 July 2025 |
H |
Financial Services |
Major expansion (insurance, digital, remittance) |
RM1,000,000 |
8% |
1 July / 1 Sep 2025 |
I |
Other Service Providers |
Inclusion of private healthcare services* as newly taxable service |
RM500,000 / RM1,500,000* |
6%*/8% |
1 July 2025* |
J |
Logistic services |
No significant update |
RM500,000 |
6% |
- |
K |
Rental or Leasing |
Now includes all tangible asset rentals |
RM1,000,000 |
8% |
1 July 2025 |
L |
Construction |
Most construction now taxable (except housing accommodation and public facilities approved by the local authorities solely as residential buildings) |
RM 1,500,000 |
6% |
1 July 2025 |
M |
Education |
Applies to high-fee non-government schools and non-citizen |
No threshold (RM60k/student or non-citizens) |
6% |
1 July 2025 |
How YYC Can 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.