SST Late Filing and Payment Penalties in Malaysia: Rates, Offences and How to Fix a Miss

By Axecta Management Services, Kuala Lumpur · Last verified: 29 October 2026

What the penalty rules say

The Royal Malaysian Customs Department sets out its penalty structure on the MySST penalties page. The late payment penalty applies when the tax is not paid within the stipulated period. As at July 2026 on the official page (last updated 19 July 2026 when we checked), the scale is:

The same percentages appear in the service tax FAQ and the sales tax FAQ. Because the penalty is calculated on tax that remains unpaid, paying part of the tax early reduces the base for later steps. Customs may revise its materials, so confirm the current wording before you quote a figure to anyone.

Worked example (illustrative)

A Sdn Bhd consultancy files its SST-02 on time but does not pay the RM10,000 service tax due. This example uses round numbers with the percentages Customs states.

The ten percent, fifteen percent and fifteen percent steps sum to the 40 percent maximum. If the company pays RM6,000 early in the second 30-day period, the additional percentage applies to the outstanding RM4,000 rather than the full RM10,000. Treat this as an illustration of how the stated percentages work, and ask Customs to confirm the assessment on your actual account.

Offences and fines beyond late payment

Late payment is a penalty. Some failures are offences. The penalties page lists:

• Failure to keep records for 7 years: a fine not exceeding RM50,000, imprisonment not exceeding 3 years, or both.
• Submitting an incorrect or incomplete return: a fine not exceeding RM50,000, imprisonment not exceeding 3 years, or both.
• Improper tax deduction: anyone who causes a tax deduction exceeding the appropriate amount is liable to a fine not exceeding RM50,000, plus a penalty equal to twice the over-deducted amount.

These are maximums, not predictions of what will happen in any case, but the exposure is real and directors should not treat SST as a back-office detail. Our guide on what happens when a company misses a filing deadline covers the wider pattern across agencies.

Remission: asking for the penalty to be reduced

The penalties page says the Director General has the power to remit (reduce) the whole or any part of a penalty or surcharge, but only where the application is supported by reasonable grounds. That means a written explanation with evidence: for example a documented system outage, a serious illness of the person responsible, or an error traced to a third party. “We forgot” is unlikely to be persuasive. The page does not guarantee remission, so budget on the basis that the penalty is payable and treat any reduction as a bonus.

The ten most common SST mistakes

1. Missing nil periods. Customs states the return is mandatory whether or not tax is payable.
2. Filing on time but paying late, or using a payment route that credits after the deadline. The paying page says online payments count only once the funds are fully credited.
3. Late registration after passing a threshold. See the SST threshold guide.
4. Charging SST while unregistered, or failing to charge it after registering.
5. Misclassifying goods or services, leading to the wrong rate, for example 8 percent applied to food and beverage, which Customs puts at 6 percent.
6. Declared figures that do not match invoices or the ledger.
7. Wrong timing, such as declaring service tax on the invoice date when the rule is when payment is received.
8. Unsupported deductions or exemptions, including contra adjustments with no credit notes.
9. Not keeping records for 7 years, or keeping them outside Malaysia without permission.
10. Not filing the final return after closing the business. Customs states the final SST-02 is due not later than 30 days after cessation.

Many of these start in the accounts, not at the filing screen. Our article on accounting mistakes that create tax problems shows how the same ledger errors cause trouble across taxes.

Failing to register: why it is the costliest miss

A business that should have registered but did not has typically not charged SST to customers, so it cannot easily recover the tax from them after the fact. The Customs pages we read do not publish a specific penalty for late registration, and secondary sources quote offence provisions that we could not confirm on the official site. What is certain is that the tax itself is still payable for the period of liability. If you suspect you crossed a threshold some months ago, get the numbers together and take advice before approaching Customs.

A catch-up plan

1. Establish the facts. List every taxable period since your liability began and mark which returns were filed, which were paid and on what dates.
2. Recompute. Prepare the missing returns from the ledger, check rates and classification, and quantify tax and expected penalty using the table above.
3. Check supporting documents. Collect invoices, credit notes, exemption approvals and payment records for each period.
4. File first. Submit the overdue SST-02 returns on MySST. An outstanding return keeps accruing risk.
5. Pay the tax by an online route that credits promptly, and keep confirmations.
6. Request remission in writing if you have reasonable grounds, with evidence.
7. Fix the cause. Name an owner, set calendar reminders and add the SST reconciliation to month-end.
8. Review the registration itself. If the activity has fallen below the threshold, discuss whether to apply to cancel.

Prevention routine

What this means for different businesses

• Sdn Bhd: the exposure sits with the company, but the board should know the filing calendar exists. A company that is also behind on other filings can see problems compound, so use the Sdn Bhd compliance mistakes checklist.
• Sole proprietor: you carry the liability personally and a missed period affects you directly. Use a calendar owner other than yourself if you travel.
• Foreign-owned company: keep a Malaysian-based person responsible for MySST access and for the seven-year records, since records are expected to be kept in Malaysia unless the Director General permits otherwise.

How Axecta helps

Axecta’s tax team prepares overdue SST returns, calculates what is payable using Customs’ stated percentages, drafts a remission request when there are real grounds and sets up the calendar so the problem does not repeat. See our SST registration and returns service or the guide on how to file the SST-02.

Next steps

1. Check MySST today for any period showing as overdue or unpaid.
2. Gather the ledger for those periods.
3. File and pay, then write to Customs if you have grounds for remission.
4. Fix the process, and review who must register for SST if you are unsure of your own status.

Frequently asked questions