Govt to revise SST rates, broaden scope from July 1
The government will implement a revision of Sales Tax rates and expand the scope of the Service Tax starting July 1, in a move aimed at strengthening Malaysia's fiscal position through higher revenue and a broader tax base.
Finance Minister II Amir Hamzah Azizan announced today that a zero percent sales tax on necessities will be maintained, while non-essential goods will see a tax of between five and 10 percent.
He said the measures are designed to...
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Malay Mail
17 hours ago
- Malay Mail
SST expansion won't hit residential contractors, says RHB
KUALA LUMPUR, June 10 — The upcoming sales and service tax (SST) revision and expansion is unlikely to affect contractors primarily involved in residential housing, such as MGB Bhd and Kerjaya Prospek Group Bhd, according to RHB Investment Bank Bhd. However, it said contractors involved in constructing commercial, industrial, and infrastructure projects — Sunway Construction Group Bhd, Gamuda Bhd, and IJM Corporation Bhd — will be imposed with the six per cent services tax for construction services. 'Contractors could factor in the six per cent services tax when bidding for new projects. 'For ongoing projects, contractors could likely readjust or reprice the contract sum for reviewable contracts to take into account the latest expanded services tax,' it said in a research note today. To recap, the Finance Ministry said the reviewed and expanded SST announced in Budget 2025 will be effective July 1, 2025, with a five to 10 per cent sales tax to be imposed on selected non-essential goods. The service tax will be expanded to include services such as construction services, which would see a 6.0 per cent service tax applied to providers exceeding RM1.5 million in annual revenue. Meanwhile, RHB Investment Bank said residential buildings and public housing-related works are exempt from sales tax. Exemptions also apply to business-to-business transactions to avoid double taxation. 'We also take comfort that under the sales tax revision, the government is maintaining a rate of zero per cent for basic construction materials,' it said. On the other hand, the investment bank said the data centres, the main construction segment theme, are likely to remain intact despite the expanded SST. "Assuming a hyperscaler hypothetically has three new data centre projects in Malaysia worth RM1 billion each to be awarded to a contractor, the services tax on the contractor's work would amount to RM60 million per project or RM180 million in total. 'This represents approximately 0.2 per cent of the financial year 2024 net income of hyperscalers such as Google and Microsoft,' it said. It has maintained its 'Overweight' call on the construction sector. — Bernama
The Star
17 hours ago
- The Star
Govt targets RM5bil from SST revision
Minister of Finance II Datuk Amir Hamzah Azizan PUTRAJAYA: The government expects to raise RM5bil from the revision of the sales tax and expansion of the service tax (collectively SST) to other services effective July. Finance Minister II Datuk Seri Amir Hamzah Azizan, said the revision of the SST is driven by the need to improve the fiscal space of the federal government to improve the delivery of service to the public and lower the cost of living besides increasing the amount of cash assistance to the people. 'To ensure that the majority of the people are not affected by the SST revision, the Madani government is taking a targeted approach to ensure that basic goods and services are not taxed. 'In addition, various facilities are also provided to reduce the impact on micro, small and medium enterprises,' he told a media briefing here yesterday. Hence, Putrajaya has maintained zero sales tax on essential goods like rice, chicken meat, and vegetables but introduced a 5% tax on goods such as king crab, salmon, truffle and essential oil as well as raise the sales tax to 10% for products such as racing bicycles, antique hand paintings and tungsten scrap residues from 5%. It has broadened the tax base and imposed a 8% tax on services such as rental and leasing, financial and beauty services, and a 6% tax on construction, healthcare and education services. The Chartered Tax Institute of Malaysia (CTIM) said the move to revise the SST was timely and a strategic use of indirect taxation to enhance government revenue without resorting to further direct taxes or reintroducing the goods and services tax at this juncture. 'As Malaysia's service-based economy continues to grow, CTIM recognises the government's effort to broaden the tax base by incorporating more sectors into the SST regime. 'This aligns with global trends and reflects a pragmatic approach to fiscal sustainability,' it noted in a statement. CTIM added to ensure a smooth transition, it urged the government to establish dedicated support channels – such as hotlines, emails, or live chats – manned by knowledgeable personnel to provide timely responses and minimise compliance risks. The collection of the SST from registered businesses will begin next month and for companies that now come under the tax space collection, it is expected to begin in September after such businesses have registered with the Customs department. This extension of the SST is accompanied by selected exemptions to avoid double taxation as well as ensure that certain essential services for Malaysian citizens are not taxed, Amir Hamzah added. Details are available on the Royal Malaysian Custom's department's website. Putrajaya collected about RM45bil in SST in 2024. According to the Finance Ministry's official first quarter 2025 Economic Report, the federal government's revenue for the quarter amounted to RM72.1bil, driven in part by a surge in SST receipts which totalled RM11.1bil. The reimplementation of SST in September 2018 saw the government collect RM5.4bil for the period. Annual SST collection in 2019 amounted to RM27.6bil, RM25.2bil in 2020, RM25.5bil in 2021, RM31.3bil in 2022 and RM35.4bil in 2023.
The Sun
17 hours ago
- The Sun
Sales Tax rate revision, Service Tax scope expansion to be effective
PUTRAJAYA: The government will implement a revision of the Sales Tax rates and an expansion of the Service Tax's scope effective from July 1, 2025, in order to strengthen the country's fiscal position by increasing revenue and broadening the tax base. Finance Minister II Datuk Seri Amir Hamzah Azizan said these measures are aimed at improving the quality of the social safety net without burdening the majority of Malaysians. 'The government is committed to continuing the reforms under the MADANI Economy framework. To ensure that the majority of people are not affected by the Sales and Service Tax (SST) revision, the MADANI government is taking a targeted approach to ensure that basic goods and services are not taxed. 'In addition, various facilities are also being provided to mitigate the impact on micro, small, and medium enterprises (MSMEs),' he said in a statement today. Amir Hamzah said that complementing the MADANI Government's efforts to stimulate the economy and strengthen the social safety net, the additional revenue from the SST enhancements will go towards further public service improvements. These include increasing the amount of cash assistance to the people, as well as strengthening basic infrastructure and the delivery of public services. 'This additional revenue can benefit the entire country without raising the burden on the majority of the people,' he said. Amir Hamzah said the SST review has undergone the process of engagement with stakeholders, particularly industry associations and tax agents. 'Legal preparations also took into account feedback and input from the industry to ensure that the majority of the people are not affected and the impact on the industry is minimised,' the minister said. According to the statement, 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. This expansion is accompanied by selective exemptions to avoid double taxation and to ensure that certain essential services for Malaysian citizens are not taxed. Amir Hamzah said the government has also taken into account the need for legal compliance by companies that are subject to the SST. 'In line with that, for companies that take steps to comply with the SST legal requirements, no legal action or penalty will be imposed up to Dec 31, 2025,' he said. Under the Sales Tax revision, the MADANI Government is maintaining a rate of zero per cent on essential daily goods such as rice, chicken, beef, fish, vegetables, sugar, cooking oil, medicine, books, newspapers and pet food, as well as basic construction materials and agricultural inputs such as fertilisers, pesticides and machinery. This approach is aimed at ensuring that there is no direct impact on the cost of living for the majority of people and inflation rates remain manageable. Meanwhile, a five per cent Sales Tax is imposed on selected discretionary items such as king crab, salmon, cod, imported fruits, essential oils, and silk fabrics, while premium items such as racing bicycles and antique hand-painted artworks are subject to a rate of 10 per cent.
