SST revision, expansion for equitable taxation
KUALA LUMPUR: The Sales and Service Tax (SST) revision and expansion exemplify the government's commitment to progressive and equitable taxation that strengthens fiscal position while protecting those who need it most, said Finance Minister II Datuk Seri Amir Hamzah Azizan
The minister said that as the government works towards the country escaping the middle-income trap, progressive taxation becomes an important tool for sustainable and inclusive growth.
'The approach is deliberately targeted where everyday Malaysians continue to enjoy zero per cent sales tax on essential and everyday goods: chicken, rice, vegetables, cooking oil, medicine, for instance.
'In addition, basic construction materials remain untaxed, and small businesses with revenue below key thresholds are protected through carefully calibrated exemptions,' he said in a post on LinkedIn today.
On June 9, the government announced that it would implement a targeted revision of the Sales Tax rates and expansion of the Service Tax's scope, effective from July 1, 2025.
The Sales Tax rate will remain unchanged for essential goods consumed by the people, while a rate of either five or 10 per cent will be imposed on non-essential or discretionary goods.
The scope of the Service Tax will be extended to include new services such as rental or leasing, construction, finance, private healthcare, education, and beauty services.
Amir Hamzah said the SST revision and expansion reflect an increasingly sophisticated tax system that reflects values of shared prosperity and, importantly, prevents the rich-poor gap from widening further.
'Instead, we are asking those with greater capacity to contribute more, which is why discretionary luxury items and imported premium goods will bear modest tax rates.
'Top-tier private education and premium medical services for non-citizens will also be taxed, ensuring that only the wealthiest citizens and residents contribute their fair share to the country's revenue base,' he said.
Amir Hamzah emphasised that the additional revenue will flow directly back to rakyat-centric initiatives such as enhanced cash assistance via the Sumbangan Tunai Rakyat (STR) and Sumbangan Asas Rahmah (SARA) programmes, improved infrastructure, and better public services that benefit all Malaysians.
'Since announcing the planned SST expansion in Budget 2025, we have conducted extensive stakeholder engagements with industry groups and tax practitioners. The result is a policy that is both fiscally responsible and socially conscious.
'It is not easy to balance between broadening the country's revenue base while protecting the majority of Malaysians, but this latest announcement is a progressive step in that direction,' he added.
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