Retailers group calls for waiver of 8% tax for rental, leasing services

Free Malaysia Today

3 days ago

The Malaysian Retailers Association suggested that if implemented, the 8% service tax should be shared fairly between landlords and tenants. PETALING JAYA : The Malaysian Retailers Association (MRA) has urged the government to allow a complete waiver of the planned 8% service tax on commercial rental and leasing services.
MRA said in a statement that the 8% tax on commercial rentals added further pressure on its members, who were already facing a rise in fixed operating costs.
'Rental is among the largest fixed costs for many businesses and this tax will push operating expenses even higher,' it said.
MRA also said it was unrealistic to expect retail businesses to absorb the full impact of the 8% tax, and that many might have no choice but to pass these costs on to consumers.
It said that retail businesses nationwide were already under immense pressure from a succession of cost increases, including the minimum wage hike to RM1,700, electricity tariff hikes, and the 10% sales tax on low-value imported goods.
'The full scope of burdens faced by retail businesses is much broader, but these alone are already impacting business sustainability and bottom lines,' the association added.
MRA said that if the waiver for commercial rentals could not be granted, the government should defer the implementation of the tax until macroeconomic and geopolitical conditions stabilise.
It also suggested that if implemented, the 8% service tax should be shared fairly between landlords and tenants, rather than passed entirely to retail businesses.
It proposed that service charges and shared area fees be excluded from the tax scope, and that the exemption threshold be raised to RM2 million in annual sales to safeguard small and independent businesses.
The 8% service tax on rental and leasing services, expected to be enforced from July 1, applies to all service providers whose rental or lease income exceeds RM500,000.
Lessees that are micro, small and medium enterprises with annual sales under RM500,000 are exempted.
MRA suggested introducing the service tax for rental and leasing services gradually, starting at 3% and progressively increasing the rate to 8% over five years.
It also proposed that Putrajaya defer the 8% tax on rentals until after Visit Malaysia Year 2026 to preserve industry stability and support tourism-linked growth.
'MRA welcomes further discussion with the finance ministry to find a balanced and sustainable approach that supports both businesses and consumers,' it said.