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...
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Free Malaysia Today
4 hours ago
- Free Malaysia Today
View revised SST in broader fiscal context, tax expert tells M'sians
Basic necessities will continue to be exempted from sales tax, but a 5-10% rate will be imposed on non-essential items. KUALA LUMPUR : The revision of sales tax rates and the expansion of the service tax scope form part of targeted fiscal measures to keep the nation's finances on a sustainable path, say tax experts. PwC Malaysia tax leader Steve Chia said the review of the sales and service tax (SST) was expected, having been announced in the 2025 budget last October, and urged the public to view it in a broader fiscal context. 'While it is aimed at supporting the medium-term fiscal goals, a search for a longer-term solution remains necessary to ensure sustainable revenue contributions for the country. 'Although the current expansion is relatively broader, the government is committed to containing the scope to selected and non-essential goods and business-to-business (B2B) services to ensure the rakyat will not be burdened,' he told Bernama. Finance minister II Amir Hamzah Azizan had announced that the government would implement the revised SST from July 1 to strengthen the country's fiscal position and improve support for public welfare. Chia said a key challenge would be ensuring cascading costs are either eliminated or not passed along the value chain. 'Since the budget was announced, the government has made efforts to engage the relevant stakeholders, including industry associations and tax professionals, to ensure the revisions are well-informed and the impact on industries are taken into consideration. 'Therefore, the change is aimed at strengthening Malaysia's fiscal position by increasing revenue and broadening the tax base. 'We can see that the government is careful in identifying areas for rate increases and scope expansion to protect and cushion the impact on the rakyat at large.' KPMG Malaysia's head of tax Soh Lian Seng however said the current SST framework is often viewed as less comprehensive than the previous goods and services tax (GST) scheme. 'This revision appears to be an effort to make the tax structure more progressive, broadening the base while ensuring the burden does not disproportionately fall on the rakyat. 'Expanding the scope of taxable services and revising rates can help improve revenue collection, which is essential for Malaysia's medium-term fiscal consolidation,' he said. Soh said the government is likely aiming to enhance fairness and efficiency in tax collection by refining the scope and structure of the SST. Soh said there may be a short-term spike in consumer spending as people rush to make purchases before the new rates take effect, similar to what was observed in 2015 ahead of the GST's implementation. 'However, this is likely to normalise within the next few months. In regard to concerns about inflation, the impact should be modest. 'While there are exemptions and reliefs in place to cushion the impact, the net effect should still contribute positively to government coffers, supporting broader fiscal sustainability,' he added.
Free Malaysia Today
9 hours ago
- Free Malaysia Today
Govt to impose 5-10% sales tax on non-essentials, service tax expanded
The finance ministry previously said that the expansion of the sales and service tax is expected to generate RM51.7 billion in revenue in 2025. PETALING JAYA : The 0% sales tax rate for basic necessities will be maintained while a 5% to 10% rate will be imposed on non-essential goods from July 1, the finance ministry announced this evening. Meanwhile, the service tax will be expanded to include rent, lease, construction, financial services, private healthcare and education. 'This expansion however would come with some exemptions to avoid double taxation and ensure that Malaysians are not taxed for certain services,' finance minister II Amir Hamzah Azizan said in a statement. In November, Amir said the expansion of the sales and service tax (SST) was expected to generate RM51.7 billion in revenue in 2025. This would represent an additional revenue of RM5 billion over the current SST collection forecast of RM46.7 billion. Amir, this evening, said the review of the SST was done after engaging the stakeholders, including the associations of relevant industries and tax agents. He added that their input and feedback were taken into account to cushion the impact the policy would have on the industries and to ensure it would not affect the majority of the people. 'The government is committed to pushing for economic reforms. 'To ensure that the people are not impacted by the review of the SST, the government will adopt a targeted approach to make sure essential goods and services are not taxed.'
Malay Mail
9 hours ago
- Malay Mail
Malaysia introduces targeted SST overhaul from July: Essentials exempt, non‑essentials taxed at 5–10pc
KUALA LUMPUR, June 9 — The Ministry of Finance has issued a statement on the implementation of revised Sales Tax (ST) rates and expanded scope of the Service Tax effective July 1, 2025. The aim is to strengthen the country's fiscal position by increasing revenue and broadening the tax base. 1. Sales Tax i. Under the revised Sales Tax (ST) structure, essential daily goods remain taxed at zero per cent. These include chicken, beef, mutton, fish, prawns, squid, local vegetables and fruits, rice, barley, oats, wheat, flour, canned sardines, sugar, salt, white bread, pasta, vermicelli, noodles, instant noodles, milk, cooking oil, medicine, medical devices, books, journals, newspapers and pet food. The zero per cent rate is also maintained for key construction materials (cement, stones, sand) and agricultural inputs such as fertilisers, pesticides, and agricultural and livestock machinery. ii. The Madani Government is maintaining zero ST on essential daily items to avoid direct impact on the cost of living for most citizens and to keep inflation in check. iii. Selected non-essential goods will now be taxed at five (5) per cent, up from zero, including king crab, salmon, cod, truffle mushrooms, imported fruits, essential oils, silk fabrics and industrial machinery. iv. Premium discretionary goods such as racing bicycles and antique hand-painted artworks will be taxed at 10 per cent. 2. Service Tax Under the expanded Service Tax scope, six new service categories will be included: leasing or rental, construction, financial services, private healthcare, education and beauty services. i. Leasing or rental services An eight (8) per cent Service Tax will apply to service providers with annual rental or leasing income exceeding RM500,000. The Madani Government will provide exemptions for: a) Residential property rentals, reading materials, financial leases and tangible assets located outside Malaysia; b) Micro, small and medium enterprises (MSMEs) with annual turnover below RM500,000; c) Business-to-business (B2B) transactions and group relief to prevent double taxation; d) Non-reviewable contracts, which are granted a 12-month exemption from the effective date. ii. Construction services A six (6) per cent Service Tax will apply to providers with revenue exceeding RM1.5 million. Special measures include: a) A higher RM1.5 million threshold to ease compliance for smaller contractors; b) Service Tax exemption for residential buildings and public amenities; c) B2B exemptions to avoid double taxation; d) Non-reviewable contracts granted a 12-month exemption. iii. Financial services An eight (8) per cent Service Tax will be applied to fee- or commission-based services. Exemptions include: a) Basic financial services such as basic banking and interest- or profit-based Islamic financing; b) Foreign exchange and capital market gains, punitive charges, outward remittances, export-linked financing, fees to overseas remittance agents for inbound transfers, and brokerage/underwriting for life, medical and family takaful/insurance; c) B2B exemptions, shariah-compliant services and services provided for Bursa Malaysia and Labuan. iv. Private healthcare services A six (6) per cent Service Tax will apply to non-citizens using private healthcare, traditional and complementary medicine, and allied health services, provided by companies with turnover exceeding RM1.5 million. The Madani Government provides: a) Service Tax exemption for Malaysians receiving public or private healthcare, including traditional medicine (Malay, Chinese, Indian, Islamic), homeopathy, chiropractic and osteopathy; b) Service Tax exemption for allied health services (e.g. physiotherapy, audiology, speech therapy) to reduce costs and improve access; c) A reduced six (6) per cent rate for non-citizens; d) A higher threshold of RM1.5 million to reduce compliance burden for small and medium-sized clinics. v. Education services A six (6) per cent Service Tax will be applied as follows: a) Private pre-school, primary and secondary education with annual fees exceeding RM60,000 per student; b) The Madani Government views this as a targeted measure affecting high-value institutions, with limited impact. Malaysian citizens with disabilities will be exempt; c) Higher education institutions will only be taxed on fees charged to non-citizens. There will be no Service Tax on Malaysian citizens pursuing higher education. vi. Beauty services An eight (8) per cent Service Tax will apply to service providers with taxable services exceeding RM500,000 over 12 months. Examples include facial treatments and hairdressing. In line with the expansion of Service Tax scope, legal notification and gazettement will give industry players time to assess whether: i. Their business operations fall within the taxable scope; ii. Their service value exceeds the 12-month threshold; iii. They need to seek advice from the Royal Malaysian Customs Department on registration, business model adjustments, training, and documentation. — Bernama
