Malaysia to delay new taxes as manufacturers fear tariff hit
[KUALA LUMPUR] Malaysia is delaying a planned expansion of its sales and service tax, providing a temporary reprieve for manufacturers bracing for higher US tariffs.
The planned widening of the tax base, originally due on May 1, will be implemented at a later date, a spokesperson from the Ministry of Finance said in a text message, confirming a report by The Edge Malaysia.
Malaysian manufacturers have been urging the government to refrain from introducing additional tax burdens this year after the US threatened a 24 per cent tariff on the South-east Asian country. The sector, a major contributor to the nation's tax revenue, is under severe cost pressure, Soh Thian Lai, president of the Federation of Malaysian Manufacturers, said earlier this month.
Officials are seeking to negotiate a deal with Washington within the 90-day pause on the higher tariffs mandated by US President Donald Trump, who has in the meantime imposed a 10 per cent levy on goods from Malaysia and many other trading partners.
The government is currently reviewing its official growth projection of 4.5 to 5.5 per cent for 2025, with the US levies causing uncertainty for investment and trade.
The finance ministry's engagements with industries across the country to finalise the scope of the expansion and the applicable tax rates have been completed, the spokesperson said. The guidelines and scope are being refined to ensure smooth implementation, they said.
The tax changes will be gazetted on Jun 1, Anis Rizana Mohd Zainudin, director general of the Royal Malaysian Customs Department, responsible for the execution and enforcement of the sales and service tax, was quoted as saying by The Edge Malaysia. It was originally scheduled for the first quarter.
Prime Minister Anwar Ibrahim said in October, when he unveiled the nation's budget, that the sales and service tax will apply to non-essential items, including premium imported goods such as salmon and avocado. It will also be widened to cover commercial services. BLOOMBERG
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