Do Malaysian sellers pay withholding tax on top of SST for marketplace ads

This question comes up in Malaysian seller groups every few weeks. A seller tops up Shopee Ads, Lazada Sponsored Solutions or TikTok Shop ads, sees a tax line on the invoice, and then someone in the comments says “you also need to pay withholding tax on that.” Now they are wondering if they are being taxed twice on the same ad spend.

Short answer: SST and withholding tax are two different things that sit on different sides of the transaction. The SST you see on an ad invoice is a charge added by the platform. Withholding tax is something a payer may have to deduct and send to the tax authority when paying certain kinds of income to a non-resident. Whether it applies to your ad spend depends on who bills you and what the payment is for, so it is not automatic. I run an operator business out of Singapore, not a Malaysian accounting practice, so treat this as an explainer. This is not legal/tax advice.

What it is

There are two separate concepts here.

SST means Sales and Service Tax, run by the Royal Malaysian Customs Department. For ad spend the relevant part is service tax, charged on taxable services. Since 2020, Malaysia has also required foreign companies that sell digital services to Malaysian customers to register and charge service tax, which is why overseas platforms show a tax line on invoices. As of October 2026 the main service tax rate is 8%, and some categories stay at 6%. Rates have changed before, so check the Customs site rather than trusting a blog.

Withholding tax is an income tax mechanism under the Income Tax Act 1967, administered by LHDN (Lembaga Hasil Dalam Negeri, the Inland Revenue Board). When a Malaysian resident or business pays certain types of income to a non-resident, such as royalties, technical fees, or fees for services performed in Malaysia, the payer may have to deduct tax from the payment and remit it to LHDN. The rate depends on the type of income and any applicable tax treaty. The key point is that the obligation sits with the person making the payment, not with the person receiving it.

So one is a tax the platform adds and collects. The other is a tax you may owe on the platform’s behalf if the payment falls into a covered category.

How it works

Take a typical case. You buy ad credits on a marketplace seller centre. The invoice comes from a platform entity, which might be a Malaysian company or a foreign one depending on the platform and the product. That is the first thing to check, because it decides which rules even get asked.

Step one, look at the invoice or receipt in the seller centre. Note the legal name of the billing entity, whether it has a Malaysian address, and whether there is a tax line labelled SST or service tax with a registration number.

Step two, understand the SST line. If the platform is registered and charges service tax, that amount is included in your top-up. You pay it as part of the price. It is generally not something you separately file as a small seller, because the platform collects and remits it. If the invoice has no tax line at all, that is worth a question to the platform’s support, not a reason to calculate your own.

Step three, ask the separate withholding tax question. Withholding tax is only in play when you are paying a non-resident and the payment is of a type the Income Tax Act covers. Ad placement services delivered online by a foreign platform are a grey area that depends on the facts: where the service is performed, how the contract is structured, and which section applies. I am not going to guess at a section number here, because getting that wrong would send you the wrong way. This is exactly the kind of thing LHDN publishes guidance on, and it is worth reading before you ask an accountant.

Step four, get the answer in writing from someone qualified. Bring your invoices, the billing entity name, and a plain description of what the money buys. A Malaysian tax agent can answer in one email what a forum thread argues about for 200 comments.

To make the difference concrete, here is how the two look side by side:

• service tax: charged by the platform, shown on the invoice, included in what you pay
• withholding tax: deducted by the payer from a payment to a non-resident, remitted to LHDN, only for covered payment types
• who handles it: the platform for SST, the payer (you) for withholding tax if it applies
• where to read the rules: Royal Malaysian Customs for SST, LHDN for withholding tax

Why it matters

I would not skip this just because the amounts look small on a single top-up. A few reasons it is worth ten minutes.

• Cost accuracy: if you run ads seriously, tax on spend changes your real cost per order. I covered how to judge whether ads are worth the spend in is Shopee Ads worth the budget for a small seller. Tax lines belong in that calculation, not as a surprise at year end.
• Not paying twice by mistake: some sellers hear “withholding tax” and start deducting amounts from payments that the platform has already taxed through SST. That creates a mess nobody asked for.
• Not missing a real obligation: the opposite risk is also real. If a payment you make to a non-resident does fall under withholding, the obligation is yours, and ignoring it is a compliance gap.
• Clean books: marketplace income, platform fees and ad spend all feed into your accounts. If you ever apply for financing, as in business loans and cash advances from Shopee, Lazada and other marketplaces, lenders and platforms look at your records, and clear tax treatment helps.

Common misconceptions

• “SST on my ad invoice means I have paid all the tax on ads.” SST is the platform’s charge. It does not tell you anything about whether a separate withholding obligation exists. They answer different questions.
• “Withholding tax is a second tax added to every ad invoice.” No. It is not a line the platform adds. It is a deduction a payer makes in specific situations. Many ad top-ups will not involve it at all, depending on the billing entity and the nature of the service.
• “If it applies to someone in my group, it applies to me.” The answer turns on facts: who the billing entity is, which platform and ad product, whether you are a company or a sole proprietor, and what any tax treaty says. A rule of thumb from a stranger’s post is not a ruling.
• “The platform will tell me if I owe it.” Platforms tell you what they charge. They do not usually advise on your own tax position. The seller centre help pages are for operating the account, not for tax planning.

One more thing I will say plainly. If an account gets into trouble, tax is rarely the cause. Suspensions usually come from policy issues, which I wrote about in why seller accounts get suspended. Tax is a separate track, but it is still your job to keep it tidy.

Where to go from here

Start with the primary sources, then move on to the operating side of the business.

• Read LHDN’s guidance on withholding tax for payments to non-residents at hasil.gov.my, and look under the section for non-resident payments and withholding tax.
• Check the current service tax rules, including the foreign digital service provider regime, with the Royal Malaysian Customs Department at customs.gov.my and the MySST portal at mysst.customs.gov.my.
• If your ads are not converting and tax is the least of your worries, read why a Lazada store gets visitors but no orders before putting more money into spend.
• If you are comparing platform tiers and what they cost to maintain, see Shopee Mall vs Preferred Seller requirements. The rest of the explainers are in the blog index.

A practical checklist before you talk to an accountant:

• export your last three months of ad top-up invoices from each platform
• note the billing entity name and address on each
• note whether there is an SST line and registration number
• write one sentence on what the money buys, for example “sponsored product placement inside the Shopee app”
• say whether you trade as a sole proprietor, partnership or Sdn Bhd

With that in hand, the accountant can tell you whether withholding tax is even a question for you. Rates, thresholds and platform billing arrangements change, so anything I have written is as of October 2026 and may be out of date by the time you read it. This is not legal/tax advice. Check with LHDN, Royal Malaysian Customs or a licensed tax agent before acting.

Written by Xavier Fok

disclosure: this article may contain affiliate links. if you buy through them we may earn a commission at no extra cost to you. verdicts are independent of payouts. last reviewed by Xavier Fok on 2026-10-12.