Complete Guide to POS Systems for SST Compliance in Malaysia (2025)

Introduction: Why POS Systems Are Critical for SST 2025 Compliance

Starting July 1, 2025, Malaysia has implemented an expansion of the scope Sales and Service Tax (SST), the largest since its reintroduction in 2018. This change not only adds more categories of taxable goods and services, but also introduces requirements mandatory digital integration through a POS system that is compatible with the platform MyInvois e-POS LHDN.[1][2]

For retail, F&B, and service businesses in Malaysia, POS systems now function as the backbone of digital tax compliance— not just a payment tool. Failure to adapt the system to the requirements of SST 2025 could result in penalties of up to RM50,000.[4][5]

Key Changes to the 2025 SST That You Must Know

1. 2025 SST Excise Rate Structure

Malaysia maintains a two-tier tax system with different rates according to the type of goods and services:

Sales Tax:

·  5%– Selected items such as premium fish (salmon, king crab), certain imported fruits, essential oils, silk fabrics[6][7]

·  10%– Luxury items including racing bicycles, hand-painted antique artwork[8][6]

·  0%– Basic necessities (rice, chicken, eggs, vegetables, local fish such as selar, tongkol, cencaru)[7][9]

Service Tax:

·  6%– Food & beverage (F&B), telecommunications, vehicle parking, logistics services, construction, private healthcare for non-citizens[10][11][7]

·  8%– Most other services include commercial rental/leasing, fee/commission based financial services, professional services and others not defined are fixed at the rate 6% or excluded[10][7]

2. Expansion of the Scope of Service Tax

Starting July 2025, service tax has been expanded to new categories:[1][12][13][8]

Important Exceptions:

· Beauty services (manicure, pedicure, facial, haircut) excluded after public feedback[9]

· Selected imported fruits (apples, oranges, mandarin oranges, dates) excluded starting July 2025[6][9]

· Malaysian citizens excluded from private healthcare service tax[11][8]

3. SST Registration Threshold

SST registration is mandatory when the annual turnover of a business exceeds the following thresholds:[14][1]

·  General (Manufacturing & Most Services): RM500,000

· **Rental/Leasing & Financial Services:**RM1,000,000

· **Construction & Private Healthcare:**RM1,500,000

Businesses must apply for registration no later than the last day of the following month after exceeding the threshold.[15][16][14]

4. Grace Period Until 31 December 2025

The Malaysian government has provided penalty-free grace period until 31 December 2025 for the following errors:[12][17][1]

· Late registration

· Late submission of return

· Late payment

· Incorrect declaration (underdeclaration & underpayment)

· Any errors related to invoices, credit notes, or debit notes

**Important:**This exception does not apply to fraudulent or intentional offenses.[17]

LHDN e-Invoice Integration Requirements for POS Systems

Phased Implementation of Malaysia’s e-Invoice

The Inland Revenue Board of Malaysia (IRB) has made it mandatory to implement e-Invoices in stages based on the business’s annual turnover:[18][19][21]

Exceptions: Businesses with turnover below RM1,000,000 are completely exempt from the e-invoice requirement.[19]

MyInvois e-POS: Free IRB Solution

The IRB provides MyInvois e-POS as a free digital Point-of-Sale platform for micro and small enterprises. This system allows:[21][2]

· Direct e-Invoice generation during transaction

· Sales management, accounting, inventory and financial reporting

· Automatic compliance with IRB e-Invoice requirements

POS-e-Invoice Integration Technical Requirements

The POS system must support:[22]

1.  Format Invoices XML or JSONaccording to IRB standards

2. MyInvoice API Integration for real-time data transmission

3.  QR code and unique reference number on each confirmed invoice

4. Invoice confirmation in less than 2 seconds

5.  Electronic data storage minimum 7 years[23][24]

Mandatory Features of POS Systems for SST 2025 Compliance

To ensure full compliance with SST and e-Invoicing, your business POS system must have the following features:

1. Automatic SST Calculation

The system must be able to automatically calculate the correct tax rate (5%, 6%, 8%, or 10%) based on the product category. This reduces manual errors and ensures tax accuracy.

2. Integration of e-Invoice with MyInvois API

POS must connect directly to the LHDN server via MyInvoice API for:[22]

· Automatic electronic invoice generation

· Real-time invoice verification

· Sending transaction information to LHDN and customers simultaneously

3. Product Tax Code Management

Each item in inventory must be coded with the correct tax status (exempt, 5%, 6%, 8%, or 10%) to ensure accurate SST calculations.

4. Monthly SST Reporting

The system must be able to generate SST reports in a format suitable for submission. Form SST-02 via the MySST portal every two months.[5][26][27]

5. Cloud Data Storage (Cloud Storage)

Cloud-based POS makes it easy to:

· Access data from any location

· Automatic backup for audits

· Real-time synchronization between multiple branches

6. Offline Mode

A good POS system must have offline operating capabilities to ensure business continues to operate during internet outages:

· Local transaction storage

· Automatic synchronization when connection is restored

· Backup data to prevent information loss

7. User Access Control & Security

Protect tax records from unauthorized modifications through:

· User access hierarchy

· Complete audit trail

· Data encryption

SST Registration Process Through MySST

Registration Steps

Businesses must register through portal MySST (mysst.customs.gov.my) once the turnover exceeds the threshold:[16][25][14]

Step 1: Check if your goods/services are subject to SST
Step 2: Log in to the MySST portal with your business information
Step 3: Complete the registration form (Sales Tax and Service Tax are separate)
Step 4: Upload the required documents:

· SSM business registration certificate

· Financial statements

· Business license

· Bank account information

Step 5: Receive SST registration number (usually within 7-14 working days)

Registration Deadline

Businesses must register no later than the last day of the following month after the month they exceed the registration threshold.[14][15][5]

SST Tax Invoice Issuance Requirements

Mandatory Information in Tax Invoices

A valid tax invoice must contain:[21]

1. Business name and registration number (BRN)

2. SST registration number

3. Buyer’s name and address

4. Invoice date and serial number

5. Description of goods/services

6. Quantity and unit price

7.  Amount of SST charged (shown separately)

8. Total amount to be paid

Penalty for Failure to Issue Invoice

Failure to issue a tax invoice can result in penalties of up to RM30,000 or 2 years imprisonment or both.

Record Keeping & Audit Requirements

Record Retention Period

All SST registered businesses must keep complete records for7 years from the end of the year of assessment. Compulsory records include:[24][28][23]

· All invoices, receipts, debit and credit notes

· Daily, monthly, annual sales reports

· Debtors list and aging

· Audited financial statements

· Bank statement

· Contract agreement and progress report

Electronic Storage Format

Records stored in electronic form must:[23]

· Easily accessible and converted to written form

· Stored in Malaysia unless approved by the Director General of Customs

· Maintained in the original format before conversion (if initially in manual form)

SST 2025 Non-Compliance Penalty

Penalty Schedule

**Remember:**The penalty-free grace period is in effect until December 31, 2025for businesses that demonstrate genuine compliance efforts.[1][12]

POS Implementation Strategy for SST Compliance

Phase 1: Existing System Audit (Month 1)

1.  Value current POS capabilities to support e-Invoices and SST calculations

2. Identify compliance gaps between the existing system and the 2025 needs

3.  Determine whether to upgrade or replace system is required

Phase 2: System Selection & Implementation (Months 2-3)

1.  Choose a POS provider which supports MyInvois API and automatic SST calculation

2. Integration test in a sandbox environment

3.  Implement in stages starting with one branch or section

Phase 3: Training & Adaptation (Months 3-4)

1.  Train staff regarding:

• Introduction to tax vs non-tax items 
• e-Invoice transaction processing 
• Exception and error handling
  2.  Provide SOP documentation for daily reference
  3.  Implement a feedback system for continuous improvement

Phase 4: Monitoring & Optimization (Ongoing)

1.  Monitor compliance through automatic reports

2. Conduct internal audits periodically

3.  System update according to changes in RMCD/LHDN regulations

Cost of Implementing an SST Compliant POS System

Cloud POS

Initial Cost:

· Hardware (tablet, card reader): RM500 – RM2,000

· Setup cost: Low (usually included in subscription)

Recurring Costs:

· Monthly subscription: RM150 – RM500+ depending on features

· Payment processing fee: 2.5% – 3.5% per transaction

· Maintenance & updates: Included in subscription

**Savings:**Up to 30% over 5 years compared to traditional systems

Traditional POS (On-Premise)

Initial Cost:

· Complete hardware: RM5,000 – RM15,000+

· Software license: RM3,000 – RM10,000

· Installation & configuration: RM1,000 – RM5,000

Recurring Costs:

· Annual maintenance: RM1,000 – RM3,000

· Software updates: Separate cost

· IT Support: Internal or contract costs

POS Integration with Accounting & HR Systems

Benefits of End-to-End Integration

POS system integration with other platforms creates a complete compliance ecosystem:[37]

Accounting Integration:

· Automatic sales data synchronization

· Tracking SST input and output

· Real-time financial report generation

· Preparation of accurate monthly SST returns

HR & Payroll Integration:

· Employee claims management (self-billing e-Invoice)

· Time and attendance tracking

· Automatic sales commission calculation

Inventory Management Integration:

· Real-time stock updates

· Automatic low stock alerts

· Tracking cost of goods and profit margins

Middleware Solutions

For businesses with disparate systems that are not connected, e-Invoice middleware like JomeInvoice or Operion could be a solution:[36]

· Connecting POS, accounting, and LHDN MyInvois

· Full automation of sales invoices, purchases, and self-billing

· Reduce custom development costs

Long-Term Benefits of SST Digital Compliance

1. Operational Efficiency

·  Reduction in administration time up to 60% through automation

·  Data accuracy higher with automatic calculation

·  Cost savings from the reduction of manual errors

2. Competitive Advantage

·  Eligibility for government contracts which requires full compliance

·  Business reputation better with corporate clients

·  Access to financing which is easier with transparent financial records

3. Business Growth

·  Scalability to open new branches easily

·  Sales analytics for a more effective marketing strategy

·  Optimal inventory management reduce waste

4. Long-Term Compliance

·  Easier audits with complete digital records

·  Risk reduction tax penalties and summonses

·  Readiness for future digital regulations

Frequently Asked Questions (FAQ)

1. Do all businesses need to use a POS system for SST?

Not mandatory, but highly recommended especially for businesses that:

· Has a high volume of transactions

· Operates in multiple locations

· Subject to mandatory e-Invoice based on annual turnover

2. Can I use the free MyInvois e-POS POS system?

Of course, LHDN provides free MyInvois e-POS for micro and small enterprises. However, this system may lack features compared to commercial POS for larger businesses.[2][21]

3. How long is the transition period for upgrading the POS system?

Depending on the size of the business, usually 2-4 months for complete implementation including system selection, installation, training, and testing.

4. Is cloud-based POS safe for tax data?

Of course, the latest cloud POS uses industry-standard encryption and data protection compliance. In fact, it is often more secure than local storage which is vulnerable to hardware failure or disaster.

5. What if the internet is disconnected?

Modern POS has offline mode which allows for continuous operation. Data is stored locally and automatically synchronized when connectivity is restored.

Conclusion: Preparing for the Digital Compliance Era

Implementation SST 2025 And Mandatory e-Invoice marks a significant tax digital transformation for Malaysian businesses. A compliant POS system is no longer an option — it is critical needs for:

✅ Legal compliance— Avoid penalties of up to RM50,000[4][5]
✅ Operational efficiency— Automation of tax calculations and reporting
✅ Competitive advantages— Eligibility for large contracts and financing
✅ Business growth— Data analytics for strategic decisions
✅ Future readiness— Infrastructure for continuous digitalization

Take action now:

1.  Audit existing POS systems you before the end of 2025

2. Choose a solution which supports MyInvois API and automatic SST

3.  Train staff for new operations

4. Take advantage of the grace period until 31 December 2025

5.  Consult a tax expert for full compliance

With early preparation and strategic implementation, an SST-compliant POS system will be a valuable asset that drives efficiency, compliance, and growth of your business in Malaysia’s digital era.

Source:

Notes: The information in this guide is accurate as of October 2025. Always refer to the official RMCD and LHDN portals for the latest updates on SST and e-Invoice regulations.

1. https://malaysia.incorp.asia/guides/malaysia-new-sst-2025-guide/
2. https://www.hasil.gov.my/en/myinvoisepos/
3. https://mysst.customs.gov.my/assets/document/SST Act/Service Tax Act 2018\_b.pdf
4. https://mysst.customs.gov.my/Penalties
5. https://mysst.customs.gov.my/assets/document/Specific Guides/Sales Tax\_Service Tax\_Guide on Return and Payment V3.pdf
6. https://www.yycadvisors.com/malaysia-sales-tax-updates-july-2025.html
7. https://www.ajobthing.com/resources/blog/sst-malaysia-2025
8. https://global.ecovis.com/expanded-scope-of-sales-and-service-tax-in-malaysia/
9. https://www.mof.gov.my/portal/en/news/press-release/revision-to-the-expanded-sales-tax-and-service-tax-take-into-account-public-and-industry-feedback
10. https://www.bdo.my/getattachment/12980a89-17f5-4108-8be7-e30be596287e/Soalan-Lazim-FAQ-Cukai-Perkhidmatan
11. https://www.mof.gov.my/portal/pdf/siaran-media/expansion-sst-scope.pdf
12. https://www.aseanbriefing.com/news/malaysia-expands-sst-from-july-1-what-businesses-should-know/
13. https://www.wolterskluwer.com/en-my/expert-insights/service-tax-sst-expansion-in-malaysia
14. https://taxpod.com.my/articles/sst-malaysia/
15. https://mysst.customs.gov.my/assets/document/Industry Guides/GI/GUIDELINES FOR THE TRANSITION OF SALES TAX RATE CHANGES.pdf
16. https://mysst.customs.gov.my/registerbussiness
17. https://mysst.customs.gov.my/assets/document/Service Policy/STP 1-2025 (Financial).pdf
18. https://blog.fundingsocieties.com.my/e-invoicing-malaysia/timeline
19. https://fastlane-global.com/my/blog/malaysia-e-invoice-implementation-timeline-2025/
20. https://www.hasil.gov.my/en/e-invoice/implementation-of-e-invoicing-in-malaysia/e-invoice-implementation-timeline/
21. https://mysst.customs.gov.my/TaxInvoices
22. https://www.hasil.gov.my/media/uwwehxwq/irbm-e-invoice-specific-guideline.pdf
23. https://mysst.customs.gov.my/assets/document/1. General Guide Service Tax V2\_30082018.pdf
24. https://www.taxilla.com/malaysia-indirect-tax-guide-2025
25. https://grof.co/my/blog/sst-malaysia-guide
26. https://mysst.customs.gov.my/assets/document/1.%20Guide%20Service%20Tax%20Return%20and%20Payment_05092018.pdf
27. https://mysst.customs.gov.my/TaxReturn
28. https://www.saifudinco.com/insights/sst-malaysia-practical-compliance-guide-2025
29. https://www.multiable.com/blog/navigating-pos-erp-malaysia-sst-e-invoicing