What Taxes do Restaurants Pay in Malaysia? | Complete Guide and Rates

Running a restaurant in Malaysia is about more than serving great food — it’s also about staying on top of your numbers, especially when it comes to taxes. Whether you’re a seasoned owner or just getting ready to open your doors, understanding how Malaysian tax laws apply to your business is non-negotiable. Miss a filing, skip a registration, or misclassify your services, and you could end up with penalties that eat into your profits fast.

The challenge? Tax rules for restaurants aren’t always straightforward. Depending on your setup — whether you’re a small café, a franchise, a cloud kitchen, or a full-service dining spot — your obligations may differ. From Sales and Service Tax (SST) and income tax to payroll contributions and digital platform fees, there are several moving parts to manage.

This guide breaks everything down in plain language. You’ll learn:

Which taxes apply to your type of restaurant
How much you’re expected to pay and when
Which deductions are allowed (and which aren’t)
How to register, report, and avoid costly mistakes

Think of this as your roadmap to staying compliant, avoiding surprises, and making smarter financial decisions that keep your restaurant thriving — not just surviving.

Why Understanding Tax Rules Can Make or Break You

Taxes aren’t just something you deal with once a year — they impact your margins, cash flow, hiring decisions, and even pricing strategy. In Malaysia’s restaurant industry, where costs are tight and compliance is heavily regulated, staying ahead of your tax obligations is essential. Misunderstand the system, and you could be looking at backdated bills, audits, or penalties that knock your business off course.

Tax isn’t just an annual chore — it affects daily operations

From pricing your menu to structuring your staff payroll, taxes shape key financial decisions every day. If you’re charging 6% service tax but not remitting it properly, that’s a liability waiting to happen. Or if you don’t factor SST into your supplier costs, your food cost percentages will be off — and your profit margins with them.

Examples of daily tax impact:

Deciding whether to charge a service fee or include it in prices
Determining whether food delivery platform commissions are taxable
Choosing staff salaries to align with EPF, SOCSO, and PCB obligations

Understanding tax isn’t just for your accountant — it’s a survival skill for every owner.

How staying compliant protects your business long-term

Malaysia’s tax authorities (LHDN and Customs) are increasingly digitized, connected, and strict about enforcement. Even small operators aren’t immune from audits. A misstep in SST registration, underreported income, or late payroll filing can lead to fines or business suspension — or worse, losing your business license.

Compliance means:

Registering for SST when your revenue crosses RM500,000
Filing monthly returns on time (especially for SST and payroll)
Keeping proper documentation in case of audit

A clean tax record builds trust — with the government, banks, and even potential investors or buyers.

Penalties for late filing, underpayment, or wrong registration

Tax mistakes don’t just get a slap on the wrist — they can hurt. Failing to register for SST when required, under-declaring sales, or submitting late filings can result in:

Late payment penalties of 10% to 25%
Daily interest charges on outstanding balances
Fines up to RM50,000 or imprisonment for serious offenses
Suspension of your SST account, freezing business operations

The costs of non-compliance often outweigh the taxes you’d pay if you got it right from the start. That’s why understanding your obligations from day one is so critical.

The Core Taxes Every Restaurant Must Deal With

Whether you run a food truck, a boutique café, or a multi-outlet franchise, there are a few taxes in Malaysia that every restaurant owner needs to understand and manage properly. These aren’t optional — they’re fundamental parts of operating a legal, profitable business. And while not all of them hit your books the same way, ignoring any one of them can lead to serious compliance issues.

Sales and Service Tax (SST): What Applies and What Doesn’t

Malaysia’s SST system is split into two parts: Sales Tax and Service Tax. As a restaurant owner, you’ll primarily be dealing with Service Tax at 6%, which applies if your annual revenue exceeds RM500,000 and your business falls into the taxable category.

Here’s how it breaks down:

Service Tax (6%) is charged to customers on top of your food and beverage prices — if you qualify
Sales Tax (5%–10%) is paid by manufacturers or importers — but it affects your ingredient and packaging costs indirectly
Not all food operators are subject to SST — food stalls, kopitiams, and small businesses under the threshold may be exempt

Failing to register for SST when required can lead to heavy penalties — so it’s critical to determine your eligibility early.

Corporate Income Tax: What You Owe on Profits

If your restaurant is registered as a Sdn Bhd (private limited company), you’ll need to file and pay corporate income tax annually based on your net profit. The current corporate income tax rates are:

15% on the first RM150,000 (for SMEs with revenue below RM50 million)
17% on the next RM450,000
24% on income above RM600,000

What matters here:

Accurate bookkeeping and documentation of deductible expenses
Proper profit calculation before tax
Filing annual returns with the Inland Revenue Board (LHDN)

If you’re operating under a sole proprietorship or partnership, this income is taxed as part of your personal income tax instead.

Withholding Tax: When You Pay Foreign Vendors

Withholding tax applies when you pay certain types of income — like royalties, technical services, or software licenses — to non-resident companies. Many restaurants overlook this when they deal with:

Foreign-based POS or online booking software
Overseas marketing consultants
Licensing agreements with international brands

Withholding tax rates vary from 10% to 15%, and must be remitted to LHDN. Failure to do so not only leads to penalties, but also disqualifies the expense from being tax-deductible.

Real Property Gains Tax (RPGT): If You Sell the Business Property

If your restaurant owns property and you sell it for a gain, Real Property Gains Tax (RPGT) will apply. The rate depends on how long you’ve owned the property:

30% if sold within 3 years
20% in the 4th year
15% in the 5th year
10% or 0% beyond the 5th year (depending on seller type)

For restaurants operating in their own premises, this tax becomes relevant if you ever sell, relocate, or transfer ownership.

Stamp Duty: What You Pay on Lease Agreements and Transfers

Many restaurant owners forget that signing a commercial lease, purchasing equipment, or transferring shares triggers stamp duty obligations. Common scenarios include:

Lease agreements: Stamp duty is based on rental amount and contract length
Transfer of business assets or shares: Flat or ad valorem rates may apply
Loan agreements or guarantees: Often subject to fixed stamp duty fees

Always factor stamp duty into your setup or expansion costs — it’s a one-off expense, but can add up quickly if not planned for.

These five taxes form the backbone of Malaysia’s regulatory and financial obligations for restaurants. Understanding when and how they apply is the first step toward staying compliant and financially healthy.

A Deep Dive into SST for Restaurants in Malaysia

Sales and Service Tax (SST) is one of the most important — and often misunderstood — taxes in the Malaysian restaurant landscape. If you’re charging customers, sourcing ingredients, or partnering with delivery platforms, SST affects you in one way or another. This section breaks down how SST works, when it applies, how to register, and what happens if you get it wrong.

What is SST and how does it work?

SST is a single-stage indirect tax system reintroduced in Malaysia in 2018, replacing the previous GST regime. It has two components:

Sales Tax — imposed on manufacturers and importers
Service Tax — imposed on certain service providers, including restaurants

As a restaurant owner, you’re typically concerned with Service Tax at 6%, which must be charged to customers and paid to the Royal Malaysian Customs Department.

You don’t absorb SST from your own pocket — you collect it from customers, then pass it to the government.

Are you exempt? Which restaurants must register

You’re required to register for Service Tax if:

You run a restaurant, café, food court, or catering business
Your annual taxable turnover exceeds RM500,000

Exemptions usually include:

Street food stalls or hawker vendors
Small neighborhood kedai kopi (coffee shops)
Restaurants operating below the revenue threshold

But once you cross RM500,000 in revenue — even as a small franchise or food truck — you must register. Customs tracks transaction volume, especially for F&B operators in malls or central business districts.

Service Tax: When and how the 6% applies to F&B

If you’re a registered service tax business, you need to:

Charge 6% service tax on all taxable food and beverage items sold
List the tax clearly on receipts (e.g. “Service Tax 6%”)
Remit collected tax monthly to the Customs Department

Important points to know:

The 6% applies to dine-in, takeaway, and delivery
Alcohol, bottled water, and canned drinks are also subject to tax
Service charge (if any) is separate from Service Tax

For example, if you charge a 10% service charge, you’ll still apply 6% SST on top of the food total (excluding the service charge).

Sales Tax: When it affects your suppliers and pricing

While you don’t charge sales tax directly, you may indirectly pay it through your supply chain. Sales tax (usually 5% or 10%) is charged by:

Local manufacturers of kitchen equipment, packaging, or processed goods
Importers of specialty ingredients or branded products

How it impacts your business:

It increases your cost of goods sold (COGS)
You can’t claim input tax credit on sales tax (unlike GST)
You must factor it into your menu pricing for margin protection

Smart procurement planning helps minimize sales tax exposure, especially for imported items.

How to register for SST

👉 Register at: https://mysst.customs.gov.my

The registration process is handled through Malaysia’s official MySST portal. You’ll need:

Business registration documents (SSM, license)
Bank account details
Estimated turnover data
Past invoices (if already in operation)

Once approved:

You’ll get a SST registration number
You must start charging SST within 30 days
SST-02 returns are due monthly

Monthly SST returns and payment deadlines

If you’re SST-registered, here’s what’s required:

File SST-02 return every two months
Deadline: Last day of the following month (e.g. return for Jan–Feb due by March 31)
Payment must be made via online banking or FPX

Failing to file or pay on time can result in:

A 10% penalty for the first 30 days
An additional 15% after 60 days
Risk of being blacklisted or audited

Set reminders and use accounting software or a tax agent to stay ahead of filing cycles.

Examples: SST in fast food vs fine dining vs food trucks

Let’s look at how SST plays out in different formats:

Business Type	Likely SST Status	Notes
Fine Dining Restaurant	Must register (usually over RM500k)	Must charge 6% service tax on all bills
Fast Food Chain	Registered at corporate/franchise level	Consistent SST charged across outlets
Small Café (RM300k/yr)	Likely exempt unless voluntarily registered	Can’t charge SST
Food Truck (RM600k/yr)	Must register	SST applies even without seating
Caterer (RM1M/yr)	Must register	Must charge SST on all event invoices

Even portable or delivery-only restaurants must register if they meet the threshold — SST isn’t just for dine-in.

SST compliance is not just about legality — it’s also about credibility. Registered businesses are often seen as more professional, especially when bidding for catering jobs or partnering with hotels and malls. Knowing when and how SST applies helps you price correctly, avoid fines, and operate with peace of mind.

Tax Rates and Brackets You Should Know

Understanding the exact tax rates you’ll be subject to is essential for financial planning. Whether you’re filing corporate tax, personal tax as a sole proprietor, or calculating service tax or withholding obligations, having the right numbers in front of you makes all the difference. Here’s a clear breakdown of the key rates that restaurant owners in Malaysia need to be aware of.

Corporate tax rates for Sdn Bhd companies

If your restaurant is set up as a Sendirian Berhad (Sdn Bhd), you’ll pay corporate income tax based on your net profit. The rates are tiered for small and medium enterprises (SMEs), which is good news if your revenue is below RM50 million.

Current corporate tax rates (as of 2025):

15% on the first RM150,000 of chargeable income (for SMEs with paid-up capital ≤ RM2.5 million)
17% on the next RM450,000
24% on any income above RM600,000

To qualify for SME rates, your company must:

Have paid-up capital of RM2.5 million or less
Be controlled by Malaysian residents
Not be part of a group exceeding the RM50 million revenue threshold

Getting your structure and ownership right at the beginning can save you thousands in tax annually.

Sole proprietorship and partnership rates under personal tax

If you’re operating as a sole proprietor or in a partnership, your business income is added to your personal income and taxed according to individual income tax brackets.

Here are the key personal tax rates (residents):

0% on the first RM5,000
1%–13% on income up to RM100,000
21% on income between RM100,001–RM250,000
24%–30% for income above RM250,000

You’re allowed to deduct eligible business expenses to calculate adjusted income, but you must keep detailed records. Unlike companies, there are no reinvestment allowances or capital incentives available to individuals.

Service tax flat rate (6%)

If you’re SST-registered, you’ll charge a flat 6% on all taxable services. This rate is:

Not tiered — it applies equally whether your bill is RM10 or RM10,000
Charged on top of food and drink prices
Remitted monthly or bi-monthly depending on your reporting schedule

Note: This 6% should not be confused with the optional service charge (usually 10%) that some restaurants impose — that’s kept by the restaurant and not a government tax.

Withholding tax rates for specific services

If your restaurant pays non-resident companies or individuals for certain services, you may be legally required to withhold tax before remitting payments. Here are the common rates:

Payment Type	Withholding Tax Rate
Royalties (e.g. software, music)	10%
Technical or management services	10%
Interest payments	15%
Contract payments to non-residents	Varies (typically 10%)

You must remit the withheld tax to LHDN and issue a CP37 form. If you don’t, the entire expense becomes non-deductible and you could face fines.

How tax residency status impacts your rates

Personal income tax rates in Malaysia are favorable for residents, but the situation changes if you’re classified as a non-resident (i.e. you stay in Malaysia less than 183 days in a year).

Key differences:

Non-residents are taxed at a flat 30% with no reliefs or deductions
Residents benefit from progressive rates and various personal tax reliefs
This affects not only owners but also expatriate staff and partners

Ensure you or your foreign partners understand residency rules — it affects personal take-home income and business structuring.

Knowing these tax rates and brackets lets you price correctly, calculate break-even points more precisely, and avoid surprises come tax season. Staying ahead on the numbers also gives you an edge when applying for loans, expanding to new locations, or taking on investors.

How Payroll-Related Taxes Affect Your Costs

Hiring staff is a major part of running any restaurant — but it comes with a bundle of tax and statutory contribution obligations in Malaysia. Whether you’re onboarding your first server or managing a team of 30, understanding payroll-related taxes is crucial for budgeting, compliance, and avoiding unnecessary penalties. These aren’t just deductions from salaries — they’re costs that directly impact your bottom line as an employer.

SOCSO (Social Security Organisation) contributions

SOCSO provides social protection to employees through the Employment Injury Scheme and the Invalidity Scheme. Both employers and employees are required to contribute, but the employer’s share is higher.

SOCSO rates:

Employer contribution: 1.25%–1.75% of monthly wages
Employee contribution: 0.5%

Who must contribute?

All Malaysian employees earning up to RM5,000/month are covered under the First Category
Foreign workers are not required to contribute to SOCSO (except for a different protection scheme under SPIKPA)

SOCSO payments must be made monthly, and late payments incur fines and interest charges.

EPF (Employee Provident Fund) obligations

The EPF is a retirement savings scheme that both the employer and employee contribute to. It’s mandatory for Malaysian citizens and permanent residents.

EPF contribution rates (as of 2025):

Employer: 13% of monthly salary (for wages ≤ RM5,000), or 12% (for > RM5,000)
Employee: 11% of monthly salary

You must:

Register with EPF at https://www.kwsp.gov.my
Deduct the employee’s portion from their salary
Pay both portions monthly through i-Akaun

This is one of the biggest hidden costs of staffing — make sure your wage budget includes employer EPF.

EIS (Employment Insurance System)

The EIS helps workers who are retrenched or unemployed by offering temporary financial support and job search assistance.

EIS rates:

Employer contribution: 0.2% of monthly wages
Employee contribution: 0.2%

All private-sector employees aged 18 to 60 years old (except domestic workers and the self-employed) must be enrolled.

Even though the rate is small, it’s part of your total statutory obligation and must be paid along with EPF and SOCSO.

Monthly PCB (Potongan Cukai Bulanan) income tax deductions

PCB is the monthly tax deduction scheme managed by LHDN. If your employees earn enough to be taxable, you must:

Calculate the appropriate deduction using LHDN’s PCB calculator
Deduct the amount before paying salary
Submit the withheld amount to LHDN each month
Issue EA forms to employees at year-end

Important notes:

There is no fixed percentage — it depends on income level, marital status, and number of children
Failure to deduct or remit PCB properly can result in penalties for your business

You can handle this manually or use payroll software that integrates PCB calculations automatically.

Employer forms and reporting responsibilities

As an employer, you’re expected to handle monthly filings and annual reporting. Here’s a quick list of key responsibilities:

Item	Submitted To	Frequency
EPF Contributions	KWSP	Monthly
SOCSO & EIS Contributions	PERKESO	Monthly
PCB Deductions	LHDN	Monthly
Form EA (Employee Report)	Employees / LHDN	Annually
Form E (Employer Return)	LHDN	Annually

Missing deadlines or errors in reporting can result in audits, fines, or even legal action.

What changes with foreign workers

If you employ foreign staff, the rules differ slightly:

No EPF or EIS contributions are required (unless they are permanent residents)
SOCSO coverage has been replaced with foreign worker insurance schemes
You are still responsible for levy payments and withholding tax for certain contract arrangements

Also, you may need to declare foreign income separately if paying overseas consultants or specialists. Always check the latest guidelines with JTKSM (Department of Labour) and Immigration Malaysia.

Payroll-related taxes are often underestimated during startup planning — but they’re substantial. For every RM1,000 you pay in salary, expect to spend another 15%–20% in employer contributions and deductions. Getting these right protects both your team and your business while keeping you in the good books with regulators.

Tax Treatment of Common Restaurant Expenses

Understanding which restaurant expenses are tax-deductible — and which are not — can make a huge difference when it’s time to calculate your chargeable income. Malaysia’s tax laws are fairly generous when it comes to business-related deductions, but you must know how to document them properly and avoid assumptions. Not everything you spend money on is claimable — and claiming the wrong way can get you penalized during an audit.

What expenses are deductible — and what’s not

Generally, any expense “wholly and exclusively incurred in the production of gross income” is tax-deductible under Malaysia’s Income Tax Act 1967. For restaurants, that includes a wide range of operational costs.

Common deductible expenses:

Staff salaries, EPF, SOCSO, EIS contributions
Rental of premises, utilities, and maintenance
Cost of raw materials and ingredients
Marketing and advertising expenses
Delivery and logistics costs
Equipment repairs and servicing
Accounting and legal fees

Non-deductible or limited deductions include:

Personal or private expenses (e.g. owner’s personal meals)
Entertainment expenses unrelated to business (e.g. family gatherings)
Fines or penalties imposed by the government
Capital expenditures (e.g. purchase of a property or major equipment — but depreciation may apply)

How to handle food waste, staff meals, uniforms, delivery costs

These day-to-day items might seem small, but collectively they form a sizable portion of restaurant spending — and many of them are deductible if properly tracked.

Treatment of common operational costs:

Food waste: Not deductible directly, but the original cost of goods purchased is
Staff meals: Deductible if offered during working hours and documented as a staff benefit
Uniforms: Fully deductible, including branded aprons, chef coats, and laundry services
Delivery costs: Both in-house and outsourced delivery expenses are deductible, including rider salaries, packaging, and third-party app fees

Keep itemized records and separate personal vs business costs. LHDN may ask for proof of purpose during audits.

Can you deduct renovation, marketing, or licensing fees?

Some grey areas come up with setup or growth-related expenses. Here’s how to treat them:

Renovation costs:

Capital in nature, so not deductible immediately
But you may claim special tax deductions for renovations up to RM300,000 under certain government initiatives (check if still applicable for your assessment year)

Marketing expenses:

Fully deductible if they support business operations
Includes social media ads, influencer payments, flyers, menus, promo videos, etc.
Be sure to keep invoices, contracts, and payment slips

Licensing fees and permits:

Application and renewal fees for business licenses, food handling permits, liquor licenses, etc. are deductible
Fines for operating without a license are not deductible

Document everything — and ensure that receipts and invoices match the business name and tax file number.

Depreciation of kitchen equipment and fixtures

Major items like ovens, freezers, stoves, exhaust hoods, and POS systems don’t get fully deducted in one go. Instead, you claim their value over time through capital allowances (Malaysia’s version of depreciation).

Capital allowance examples:

Initial allowance: 20% in the first year
Annual allowance: 14% (typical for kitchen equipment)
Total claimable: 100% over a few years, depending on asset class

You’ll need to:

Maintain a fixed asset register
Track purchase date and cost
Stop claiming once the full cost is written off

This helps reduce your chargeable income gradually while reflecting the wear and tear on high-ticket items.

Knowing how to classify and record expenses properly helps you claim what you’re entitled to — no more, no less. Restaurants often overpay taxes simply because they don’t take full advantage of legitimate deductions. With proper bookkeeping, you can legally reduce your tax burden and reinvest more into your business’s growth.

Tips, Service Charges, and Digital Payments — What’s Taxable?

In a modern Malaysian restaurant, not all revenue flows through the till in the same way. Customers leave tips, pay via apps, and get charged service fees — and many owners are unclear about how these are taxed. The rules around gratuities, digital commissions, and service charges are evolving fast, especially with the rise of delivery apps and e-wallets. Here’s what you need to know so you don’t accidentally underreport or overpay.

Do you have to pay tax on customer tips?

Voluntary tips — the kind left by customers in cash or added to credit card payments — are not considered part of taxable income if they are:

Voluntarily given by the customer
Directly passed to staff
Not pooled and retained by the restaurant

However, if:

Tips are collected and then distributed by management, or
They are pooled and shared based on house rules, or
Included in payroll or payslips

Then those amounts may be considered part of staff remuneration and could be subject to EPF, SOCSO, and PCB.

Key tip:
If tips go into your cash drawer or POS, they may be interpreted by auditors as restaurant income — so it’s best to document your tipping policy clearly.

Is the service charge subject to SST?

Many restaurants — especially mid-to-high-end operations — add a service charge of 10% to bills. But is this 10% also subject to 6% Service Tax (SST)?

Here’s how it works:

The service charge is NOT subject to SST
You do not apply 6% SST on top of the 10% service charge
However, SST is still applied on the food and beverage amount, before the service charge

Example breakdown:

RM100 meal
+10% service charge = RM10
+6% SST = RM6 (calculated on RM100, not RM110)
Total: RM116

Be clear on your receipts, and never stack SST on service charge — it’s one of the most common mistakes flagged in audits.

What about fees from GrabFood, Foodpanda, etc.?

Delivery apps and online platforms have created new layers of tax complexity for restaurant owners. Here’s how to handle them:

Platform commissions:

The commission you pay (e.g., 25% to GrabFood or Foodpanda) is a deductible expense
You should request tax invoices from these platforms for accurate documentation
If the platform is non-resident or paid via foreign account, withholding tax may apply (check contract terms carefully)

Digital sales receipts:

All sales from delivery platforms — whether paid in cash, credit, or e-wallet — must be included in your SST declarations if you’re registered
You cannot skip tax reporting just because the money was paid online

E-wallets and QR payments (e.g., TNG, Boost):

These are just payment methods — not different income categories
Make sure all e-wallet transactions are reflected in your total daily revenue

Always reconcile your app payouts with actual orders, as discrepancies can lead to underreporting.

Taxes on digital payment platform commissions and transactions

Digital payments are now mainstream in Malaysia — and while they make transactions easier, they come with hidden fees and tax implications.

Here’s what to track:

Transaction fees charged by e-wallet providers (e.g., 1.5% per transaction) — these are deductible
Subscription fees for POS systems or ordering platforms — deductible and may include SST
If you pay a foreign platform, you may owe withholding tax or be required to self-account for SST under imported digital services rules

Important tip:
Use accounting software that can separate gross income, platform commissions, payment fees, and taxable income — this simplifies reporting and ensures accurate tax returns.

Handling these modern revenue streams correctly ensures you stay compliant and don’t miss out on deductions. The key is to separate taxable vs non-taxable items clearly, track how each charge is applied, and document all third-party fees properly. As customer payment habits evolve, your tax strategy should too.

Do You Need a Tax Agent or Can You DIY?

When it comes to managing taxes for your restaurant, one of the biggest questions is whether to hire a professional or handle everything in-house. While many owners try to cut costs by doing it themselves, tax compliance in Malaysia — especially for restaurants dealing with SST, payroll, and digital payments — can get complicated quickly. The right choice depends on your size, structure, and capacity to manage administrative tasks without mistakes.

When to handle it in-house vs outsource

If your restaurant is small, your operations are straightforward, and you’re comfortable with digital tools, doing your taxes in-house may be manageable — especially during your startup phase. That said, there’s a fine line between cost-saving and risk exposure.

DIY may be possible if:

You’re a sole proprietor or small partnership
You have minimal staff and straightforward payroll
You are not SST-registered
You use cloud-based accounting or POS software with tax features

Hire a tax agent if:

You’re operating under a Sdn Bhd and need to file audited accounts
You’re SST-registered and must file regular returns
You employ multiple staff with EPF, SOCSO, EIS, and PCB deductions
You deal with foreign transactions or digital platform commissions
You want to minimize audit risks and take advantage of full deductions legally

What a licensed tax agent does for your restaurant

A professional tax agent — especially one with F&B industry experience — doesn’t just file your returns. They act as your compliance partner and can optimize your tax position legally.

Services typically include:

Preparing and filing corporate or personal tax returns
Submitting SST-02 returns bi-monthly
Managing EPF, SOCSO, and PCB filings
Advising on deductible expenses and capital allowances
Representing you in case of a tax audit or inquiry
Helping you understand and apply tax incentives or deductions
Ensuring proper recordkeeping for audit-readiness

They’ll also keep up with changing regulations — something that can easily slip through the cracks when you’re focused on running a busy kitchen.

Average costs for tax services in Malaysia

Professional services vary depending on your business size and complexity. Here’s a general idea:

Service Type	Estimated Cost (per year)
Basic sole proprietorship tax filing	RM600 – RM1,500
Sdn Bhd tax filing + accounts (SME)	RM2,500 – RM6,000
SST return filing (bi-monthly)	RM100 – RM300 per filing
Payroll setup and management	RM20 – RM50 per employee/month
One-time audit support or tax advisory	RM500 – RM3,000 depending on case

Prices vary based on location, complexity, and the firm’s experience. While it might seem like a significant cost, avoiding penalties, missed deductions, or failed audits often makes it worth it.

Questions to ask before hiring an accountant or firm

Not all accountants are familiar with the ins and outs of the restaurant industry. Before you sign on, ask these questions:

Do you have experience with F&B businesses?
Are you familiar with SST and payroll tax obligations?
Will you help with deduction strategies and audit readiness?
Do you offer monthly bookkeeping or just annual filing?
Are you licensed with LHDN and MIA (Malaysian Institute of Accountants)?
Do you work with any cloud-based systems that sync with POS?

A good tax agent should act like a financial partner — not just a form filler.

In short, DIY works if your setup is lean and simple — but as soon as you scale, or SST and staffing come into play, a tax agent becomes a smart investment. For most restaurant owners, it’s not just about saving time — it’s about protecting your business from costly mistakes and setting yourself up for financial clarity.

Filing Schedules, Deadlines, and Government Links

Malaysia’s tax system comes with strict deadlines and multiple filings throughout the year — some monthly, some annually. Missing these deadlines can lead to penalties, interest charges, and even suspension of your tax accounts. To stay compliant (and stress-free), it’s essential to know what to file, when to file it, and where.

Here’s a breakdown of the key filing responsibilities for Malaysian restaurant owners, along with official links to get it done right.

SST return due dates and penalties for late filing

If your restaurant is SST-registered, you must submit a SST-02 return every two months.

Filing schedule:

Filing frequency: Bi-monthly (Jan-Feb, Mar-Apr, etc.)
Deadline: Last day of the following month
- Example: Jan–Feb return is due by March 31

Penalties for late SST filing:

10% penalty for late payment within 30 days
Additional 15% if still unpaid after 60 days
Risk of account suspension or enforcement action by Customs

👉 File at: https://mysst.customs.gov.my

Corporate and personal income tax deadlines

Whether you’re operating as a Sdn Bhd or as a sole proprietor, you must file income tax returns annually.

For Sdn Bhd (corporate tax):

Form C submission: Within 7 months after financial year-end
- Example: For a FYE of Dec 31, the deadline is July 31
CP204 (Tax Estimate): Must be submitted 30 days before the start of the new financial year
CP204A (Revised Estimate): Due 6th and 9th month of financial year
Tax payment: Monthly installments based on CP204 estimate

For sole proprietors and partnerships:

Form B (individual with business income): Due June 30 each year
Form P (partnerships): Due June 30 as well

👉 File via e-Filing at: https://ez.hasil.gov.my

SOCSO, EPF, and EIS monthly filing deadlines

If you employ staff, these are mandatory monthly filings you need to complete:

Agency	What to File	Deadline	Where to File
EPF	KWSP Form A	By 15th monthly	https://www.kwsp.gov.my
SOCSO	SOCSO + EIS Forms	By 15th monthly	https://www.perkeso.gov.my
LHDN	PCB (Potongan Cukai Bulanan)	By 15th monthly	https://ez.hasil.gov.my

Late contributions will incur interest and penalties, and repeated non-compliance may lead to employer blacklisting.

Useful portals for restaurant owners

To simplify tax management, bookmark these official government platforms:

💼 Income Tax (LHDN e-Filing):
https://ez.hasil.gov.my
🍽️ SST Registration & Filing (MySST):
https://mysst.customs.gov.my
👷 SOCSO Contributions (Assist Portal):
https://assist.perkeso.gov.my
💰 EPF Contributions (i-Akaun):
https://www.kwsp.gov.my
📄 Tax Estimations & Guidelines (LHDN Main Site):
https://www.hasil.gov.my

Set reminders for key monthly and annual deadlines — or better yet, automate them through accounting software or your tax agent. Staying organized with filings ensures smooth operations, fewer surprises, and a good standing with Malaysian tax authorities.

Small Restaurant? Know These Special Rules

Running a small restaurant or café doesn’t mean you’re off the hook when it comes to taxes — but you may qualify for special treatment, reduced compliance burdens, or even full exemptions depending on your size, turnover, and structure. Malaysia has specific rules that apply to micro and small F&B operators, and knowing where you stand can help you save time and money while staying compliant.

Are you below the SST threshold?

One of the biggest tax benefits for small restaurant owners is exemption from SST registration — if your annual revenue is below a certain limit.

Current SST registration threshold:

RM500,000 annual taxable turnover
Applies specifically to businesses under the “restaurant, bar, canteen, or food court” category

If you earn less than RM500,000 per year, you’re not required to register for Service Tax — and you shouldn’t charge 6% SST on customer bills.

Warning: If your revenue crosses that threshold at any point, you’re expected to register within 30 days.

Benefits and risks of staying under the RM500,000 mark

Some small operators try to intentionally keep sales under RM500,000 to avoid SST and administrative complexity — but that comes with trade-offs.

Potential benefits of staying under the threshold:

No SST filing or collection
Simpler accounting and cash handling
No need for tax-inclusive price adjustments

Risks and limitations:

Restricted ability to bid for corporate catering or hotel contracts (clients may require SST invoices)
Less credibility with banks and investors
Growth limitation if you’re avoiding expansion just to dodge SST

If you’re approaching the threshold, it’s smarter to prepare for registration than to artificially limit your success.

Should you voluntarily register anyway?

Even if you don’t hit RM500,000 in turnover, voluntary SST registration is allowed — and sometimes strategically beneficial.

Why would a small restaurant voluntarily register?

You want to claim professional credibility (important for catering or B2B clients)
You foresee growth and want to avoid scrambling later
You want to charge 6% service tax legally and include it in your pricing
You deal with SST-registered suppliers and want to align reporting cycles

However, once you register:

You’re obligated to charge and file SST
You can’t de-register unless your revenue drops significantly and is approved by Customs
You’ll need to adjust your prices, receipts, and reporting systems

So, weigh the pros and cons carefully with your accountant or advisor.

Simplified tax compliance options for micro-enterprises

If you’re a very small operator (e.g. hawker stall, roadside vendor, home-based F&B business), Malaysia offers some flexibility:

Options and considerations:

Presumptive income assessments may be allowed in rare cases, especially in informal sectors
No SST, EIS, or EPF obligations if you’re a sole operator with no employees
LHDN may allow simplified bookkeeping — but you still need to file personal income tax

However:

Once you grow (e.g. open a second location, register as a company, hire staff), your obligations increase
Cash-based businesses are still subject to audit risk, especially if income is underreported

Keeping clear daily sales records, even if you’re a cash-based microbusiness, is the best way to avoid tax issues later.

Small restaurants often operate on thin margins — but small mistakes in compliance can cost big. Knowing the rules designed for your size can help you stay lean, efficient, and fully in control of your tax position as you grow.

Smart Ways to Stay Compliant (and Avoid Stress)

Tax compliance doesn’t have to be a constant headache. With the right systems, habits, and tools in place, you can avoid penalties, reduce last-minute panic, and free yourself up to focus on what really matters — running your restaurant. Think of compliance not just as a legal obligation, but as a foundation for business confidence and long-term growth.

Set up a monthly tax calendar

Deadlines for SST, payroll contributions, and income tax can sneak up on you — especially when you’re juggling staffing, suppliers, and daily operations.

What to include in your tax calendar:

SST filing months and due dates (every two months)
Monthly PCB, EPF, SOCSO, and EIS payment deadlines (by the 15th)
Year-end deadlines for Form E and EA submissions
Corporate income tax due dates based on your financial year

Tip: Use Google Calendar or set recurring reminders in your accounting software — and share it with your manager or accountant.

Use digital POS systems with SST tracking

Modern point-of-sale systems do more than take orders — they automate your tax tracking.

Look for POS features like:

SST-inclusive pricing and item tagging
Real-time sales reports (daily, weekly, monthly)
Automatic generation of SST-compliant receipts
Integration with cloud accounting tools (e.g., AutoCount, SQL, Xero)

This ensures your SST returns are accurate, your pricing is transparent, and your records are audit-ready at all times.

Keep clean, organized records — what to archive and how long

Good recordkeeping isn’t just helpful — it’s legally required. LHDN and Customs can audit back up to 7 years, so you’ll need proper documentation to defend your filings.

What to keep (and for how long):

Sales and expense invoices (7 years)
Payroll records and PCB receipts (7 years)
SST filings and Customs correspondence (7 years)
Bank statements and payment confirmations (7 years)
Asset purchase records (until fully written off)

Use cloud storage (e.g., Google Drive or Dropbox) or dedicated accounting software to organize everything by month and category.

Run annual tax reviews with your accountant

Waiting until tax season to meet your accountant? That’s a recipe for surprises.

Instead, schedule a yearly review (or bi-annual for larger operations):

Check for missed deductions
Review SST thresholds and registration status
Plan for upcoming tax estimates (CP204)
Discuss any structural changes (e.g., expansion, new partners)
Ensure payroll records match submitted PCB and SOCSO filings

This gives you time to adjust, plan for payments, and avoid year-end scrambling.

Train your staff on tax-relevant practices (like handling tips)

Your front-line staff are part of your compliance ecosystem. If they’re handling payments, managing delivery app orders, or collecting service charges, they need to understand the basic rules around taxation and documentation.

Train your team on:

How to issue SST-compliant receipts
How to log customer tips vs service charges
Using the POS system correctly for dine-in vs takeaway
Recording e-wallet and app-based payments properly

When staff understand the “why” behind the numbers, they make fewer mistakes — and you stay out of trouble.

Staying compliant doesn’t mean spending hours buried in spreadsheets. With the right workflows and a proactive mindset, you can keep your tax obligations under control, minimize stress, and create a financial foundation your restaurant can grow on confidently.

Planning Ahead: Tax Strategy for Growth and Exit

Many restaurant owners focus only on surviving day to day — but those who plan their tax strategy with the future in mind end up saving more, expanding smarter, and exiting stronger. Whether you’re thinking about scaling up, bringing in partners, or even selling one day, how you structure your business and manage taxes today can determine how much you keep tomorrow.

Should you go Sdn Bhd or stay sole proprietor?

The structure you choose has major tax implications — not just now, but when you grow or exit.

Sole Proprietorship / Partnership:

Easier and cheaper to start
Taxed as personal income (progressive rates up to 30%)
Limited access to tax incentives
Less credibility with investors or banks

Sdn Bhd (Private Limited Company):

Subject to corporate tax rates (as low as 15% for SMEs)
Better control over owner’s salary vs dividends
Access to reinvestment allowances, capital allowances, and more
Can sell shares or raise capital more easily

Tip: Once your revenue exceeds RM500,000 and you’re hiring staff, it’s worth considering the switch to Sdn Bhd to optimize tax efficiency.

Structuring ownership for tax efficiency

If you’re sharing ownership with family, investors, or business partners, how you divide shares can affect:

Profit distribution
Dividend taxation
Future capital gains (or losses)
Exit strategy options

Best practices:

Keep clear, documented shareholding agreements
Consider setting up a holding company if planning to expand into multiple outlets
Assign roles and compensation via salary + dividends, rather than just profit share

A good tax advisor can help model scenarios to find the lowest overall tax burden for your structure.

How taxes affect valuation if you plan to sell or franchise

If you plan to sell your restaurant, bring on investors, or license your concept, your financial records and tax posture will heavily impact your valuation.

Serious buyers will look at:

Your profit after tax
SST and payroll compliance history
Any outstanding tax liabilities or penalties
Whether your business has been properly structured (e.g., Sdn Bhd with clean books)

Pro tip: Keep personal expenses and “off-the-books” revenue out of your accounting if you want top-dollar valuation — buyers won’t pay for undocumented earnings.

Using reinvestment allowances or incentives smartly

Malaysia offers tax incentives to encourage business reinvestment — but most restaurant owners don’t take full advantage.

Some useful incentives include:

Reinvestment Allowance (RA): For capital reinvestment in production or equipment (available to certain F&B manufacturing setups)
Special Renovation & Refurbishment Deductions: Up to RM300,000 claimable for business premise upgrades (check annual budget updates)
Automation & Digitalization Grants: Often paired with tax incentives for adopting POS or kitchen management systems

Ask your accountant to review current incentives every year — many are temporary or sector-specific, and worth tapping into early.

Succession planning and estate tax implications

Thinking long-term? If your restaurant is a family business, you’ll want to plan for ownership transfer in a tax-efficient way.

Key considerations:

Malaysia currently does not have inheritance tax — but rules can change
Share transfers may be subject to stamp duty
Transferring assets (like property or equipment) could trigger real property gains tax (RPGT)
Appointing nominee directors or trust structures can help manage succession planning

Having clear documentation, updated wills, and planned shareholding transitions can help your business continue smoothly — even if you step away.

Growth brings complexity — but with the right tax strategy, it can also bring bigger returns and a smoother exit. Planning ahead allows you to minimize liabilities, attract investors, and leave a legacy that’s not burdened by last-minute tax surprises.

Quick Tax Checklist for Malaysian Restaurants

Running a restaurant means juggling a thousand things at once — but taxes can’t be left to chance. This quick checklist helps you stay organized, compliant, and audit-ready throughout the year. Whether you’re just starting out or reviewing your current setup, use this list as a recurring checkpoint.

✅ Business Registration & Setup

Registered with SSM under the correct business type (Sole Prop, Partnership, or Sdn Bhd)?
Opened a separate business bank account?
Chosen the right financial year-end for planning tax timelines?

✅ Sales & Service Tax (SST)

Annual turnover exceeds RM500,000 and registered for SST?
Charging 6% Service Tax where applicable (and not on exempt items)?
Filing SST-02 returns bi-monthly via mysst.customs.gov.my?
Separating service charge (optional) from service tax (mandatory)?

✅ Corporate or Personal Income Tax

Submitted Form C (Sdn Bhd) or Form B (sole proprietor) annually?
Filed CP204 tax estimate and revised it if needed?
Claiming all eligible business expenses and capital allowances?
Clear documentation for all deductions, invoices, and receipts?

✅ Payroll Taxes & Contributions

Registered with EPF, SOCSO, and EIS for all eligible employees?
Submitting monthly contributions (Form A for EPF, Assist Portal for SOCSO)?
Deducting PCB (Potongan Cukai Bulanan) where applicable and submitting to LHDN?
Issuing EA Forms to employees annually?

✅ Recordkeeping & Reporting

Keeping records for 7 years (sales, expenses, payroll, SST returns, etc.)?
Using cloud accounting or POS software to track revenue and tax?
Regularly reconciling digital sales and app payouts?
Maintaining asset register for depreciation claims?

✅ Tax Strategy & Support

Hired a licensed tax agent or accountant (especially for Sdn Bhd)?
Scheduled yearly tax reviews to avoid surprises and stay ahead?
Aware of current tax incentives, grants, or deductions relevant to F&B?
Planned for expansion, franchising, or exit with tax implications in mind?

Staying on top of taxes doesn’t have to be overwhelming — it just needs structure. Review this checklist quarterly or after any major business change, and you’ll reduce the risk of errors, penalties, or missed opportunities. A little proactive effort can save you a lot of stress (and money) down the road.

Key Takeaways

Taxes may not be the most exciting part of running a restaurant, but they are absolutely essential to get right — from the moment you open your doors to the day you plan your exit.

SST applies to restaurants with annual revenue over RM500,000 — and comes with specific filing, billing, and pricing responsibilities.
Corporate tax rates vary based on your business structure, with Sdn Bhd entities enjoying more tax planning opportunities than sole proprietors.
Payroll taxes like EPF, SOCSO, EIS, and PCB significantly affect your labor costs and must be submitted monthly without fail.
Not all expenses are equal — understand which are deductible, how to handle depreciation, and what to document for audit readiness.
Digital sales, tips, and commissions from food apps must be tracked accurately to stay compliant with SST and income tax reporting.
Small restaurants may qualify for simplified rules, but staying under the SST threshold isn’t always the best long-term strategy.
Hiring a qualified tax agent can save time, reduce risk, and uncover deductions you might miss on your own.
Staying organized with proper filing schedules, tools, and staff training ensures compliance and reduces end-of-year stress.
Planning ahead — whether for expansion, franchising, or sale — means structuring your tax strategy early, not reactively.

In short, managing your restaurant taxes well isn’t just about avoiding penalties — it’s about building a solid financial foundation that supports your growth, profitability, and peace of mind.

ABOUT THE AUTHOR

Erkin Coban

Erkin possesses a strong passion for empowering restaurant entrepreneurs. He respects the contributions of small business owners to their communities and is dedicated to providing them with the necessary support to realize their aspirations.

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