General Information
1. What is SST, and why is it being applied to my financing?
SST stands for Sales and Service Tax. It is a consumption tax imposed by the Royal Malaysian Customs Department (RMCD) in Malaysia. Effective 1 November 2025, Malaysia's SST at a rate of 8% will apply to certain financing-related fees charged by Funding Societies.
This is part of the Malaysian government's expansion of SST to financial services, which was rolled out in phases:
Phase 1 (1 July 2025): SST applied to selected financial services
Phase 2 (1 October 2025): Extended to all other financial services not specifically exempted
2. Who is responsible for collecting the SST?
Funding Societies (Modalku Ventures Sdn Bhd) is required by law to charge and collect the 8% SST on behalf of the Royal Malaysian Customs Department and to remit the collected amount to the government.
Impact on Your Financing
3. How will SST affect my financing?
The 8% SST will be charged on top of some fees. As a result:
Your net disbursed financing amount may be lower (if the fees and SST are deducted from your facility amount)
Your total financing cost will increase correspondingly
4. Which fees are subject to the 8% SST?
SST applies to the following charges:
For Conventional Products:
Utilisation Fee
Guarantee Fee
Administrative / Facility Fee
Restructuring Fee
Uplimit Fee
Registration Fee
Other revenue-related fees within RMCD's taxable list
For Shariah-Compliant Products:
Drawdown Fee
Guarantee Fee
Administrative / Facility Fee
Restructuring Fee
Other revenue-related fees within RMCD's taxable list
Additional Fees Subject to SST:
Records Request / Confirmation Fee
Variation Fee
5. Which fees are NOT subject to SST?
The following charges are exempt from SST:
For Conventional Products:
Interest
Late Payment Interest
Early Repayment Fees / Prepayment Fees
Penalty
For Shariah-Compliant Products:
Profit
Late Payment Charges
Other Fees:
Stamping Fee (borne by the Issuer but not a service by Funding Societies)
Calculation Examples
6. Can you provide an example of how SST is calculated?
Example 1: Conventional Financing
If your conventional financing includes:
Facility Amount: RM 3,000
Utilisation Fee: RM 150 (5% of the facility)
Guarantee Fee: RM 150 (5% of the facility)
SST Calculation:
SST on Utilisation Fee: RM 150 × 8% = RM 12
SST on Guarantee Fee: RM 150 × 8% = RM 12
Total SST: RM 24
Impact on Disbursement:
Total Facility Amount: RM 3,000 + RM 150 + RM 150 = RM 3,300
Less: Utilisation Fee (RM150) + SST (RM12) = RM 162
Less: Guarantee Fee (RM150) + SST (RM12) = RM 162
Net Amount Disbursed to You: RM 2,976
Total SST: RM 24
8. How is SST shown in my documentation?
SST will be clearly disclosed in:
Your Letter of Offer (showing fees subject to SST with the notation "subject to SST fee of 8%")
Your Repayment Schedule in the Letter of Offer
Your Disbursement Email (showing the breakdown of deductions including SST)
Specific Scenarios
9. What happens if I need to restructure my financing? Will I be charged SST on the restructuring fee?
Yes. If you require a restructuring or deferment of your financing, the Restructuring Fee is subject to 8% SST.
Restructuring Fee Schedule (before SST):
Outstanding principal RM 100,000 or less: RM 100 + 8% SST = RM 108 total
Outstanding principal RM 100,000.01 to RM 200,000: RM 200 + 8% SST = RM 216 total
Outstanding principal RM 200,000.01 to RM 500,000: RM 300 + 8% SST = RM 324 total
Outstanding principal RM 500,000.01 and above: RM 500 + 8% SST = RM 540 total
10. If I make early repayment, will I be charged SST on the prepayment fee?
No. Prepayment fees (also called Early Repayment Fees) for conventional products are not subject to SST.
However, note that the prepayment fee itself is typically 2% of the outstanding principal amount and requires at least 30 days' written notice.
11. Will SST apply to late payment charges?
No. SST will not apply to Late Payment Interest (for Conventional financing) and Late Payment Charges (for Shariah-compliant financing)
12. If I request documents like settlement letters or audit confirmations, will SST apply?
Yes. The Records Request / Confirmation Fee of RM 100 is subject to 8% SST.
Total you will pay: RM 100 + RM 8 SST = RM 108 per request
This applies to requests for:
Audit confirmation letters
Finance/security documents
Settlement letters
Reference letters
Confirmation letters
13. If I need to vary my Letter of Offer or change guarantors/security, will SST apply?
Yes. The Variation Fee (minimum RM 300, may be waived at Funding Societies' discretion) is subject to 8% SST.
If charged, you will pay: RM 300 + RM 24 SST = RM 324 total
Payment and Administration
14. When is the SST charged?
SST is charged at the point of service delivery:
For upfront fees (Utilisation Fee, Guarantee Fee): Upon disbursement
For Restructuring Fee: When restructuring is approved
For Records Request Fee: When the request is processed
For Variation Fee: When the variation is executed
15. Will I receive a tax invoice for the SST paid?
Yes. Funding Societies, as a registered service tax provider, will issue proper tax documentation showing:
The fee/charge amount
The SST amount (8%)
The total amount charged
Funding Societies' service tax registration number
This will be reflected in your disbursement email and monthly statements upon request.
16. Does SST apply to existing financing facilities approved before 1 November 2025?
This depends on when the service is rendered:
For facilities disbursed before 1 November 2025: No SST applies to the original fees
For facilities approved but not yet disbursed by 1 November 2025: SST will apply to fees upon disbursement
For new fees charged after 1 November 2025 (e.g., restructuring fee, records request fee): SST will apply regardless of when the original facility was disbursed
Product-Specific Questions
18. I have a Micro Financing facility. How does SST affect me?
For Micro Financing products (both conventional and Islamic):
Fees Subject to SST:
Utilisation Fee (5% of facility) + 8% SST
Guarantee Fee (5% of facility) + 8% SST
If applicable: Restructuring Fee, Records Request Fee, Variation Fee.
Fees NOT subject to SST for Conventional Products:
Interest
Late Payment Interest
Early Repayment Fees / Prepayment Fees
Fees NOT subject to SST for Shariah-Compliant Products:
Profit
Late Payment Charges
Example from sample Letter of Offer:
Facility: RM 3,000
Utilisation Fee: RM 150 (financed)
Guarantee Fee: RM 150 (financed)
SST on Utilisation Fee: RM 12
SST on Guarantee Fee: RM 12
Total Facility Amount including profit, fees and SST excluding Profit: RM 3,324
19. For Islamic/Shariah-compliant financing, which fees have SST?
For Shariah-compliant products:
Fees Subject to SST:
Drawdown Fee
Guarantee Fee
Facility Fee
Restructuring Fee
Records Request Fee
Variation Fee
Fees NOT Subject to SST:
Profit
Late Payment Charges
Comparison with Other Financial Institutions
24. Are other banks and financial institutions also charging SST?
Yes. The 8% SST on financial services fees is a regulatory requirement that applies to all financial service providers in Malaysia, including:
Commercial banks (CIMB, Maybank, RHB, Alliance Bank, etc.)
Islamic banks
P2P financing platforms (like Funding Societies)
Insurance and takaful providers
Other licensed financial institutions
All regulated entities must comply with RMCD's SST requirements.
25. Is the SST rate different for different types of financial institutions?
No. The SST rate for financial services is uniformly 8% across all financial service providers as mandated by RMCD.
Important Reminders
Key Takeaways for Issuers:
SST is mandatory: 8% SST applies to fee-based financial services from 1 November 2025
Your net disbursement may be lower: SST charges on the upfront fees may reduce the amount you receive
SST applies to fees, not interest (for conventional financing) / profit (for Shariah-compliant financing): Interest and Late Payment Interest (for conventional financing) / Profit and Late Payment Charges (for Shariah-compliant financing) are exempt from SST
Clear disclosure: All SST charges will be clearly shown in your documentation
Cannot be waived: SST is a government tax and must be charged by law
Plan accordingly: Factor SST into your financing calculations and budget
Questions?
For any questions about SST implementation and how it affects your financing, please contact:
Funding Societies Malaysia
Email: [email protected]
Website: http://www.fundingsocieties.com.my
Address: Unit 15.01 & Unit 15.02, Level 15, Mercu 3, KL Eco City, Jalan Bangsar, 59200 Kuala Lumpur
This FAQ is for informational purposes only and is based on information available as of October 2025. For the most current information and specific advice related to your financing, please contact Funding Societies directly or consult with a tax professional.
Last Updated: 23 October 2025