SST on commercial rental will impact retail sector, says MRCA
PETALING JAYA: The Malaysian Retail Chain Association (MRCA) has called on the government to postpone the implementation of the 8% sales and service tax (SST) on rental and leasing services, due to come into effect on July 1.
MRCA said while it recognises the government's intention to broaden the national tax base and enhance fiscal sustainability through targeted measures, extending SST to commercial rental presents considerable challenges to retailers operating physical outlets.
ALSO READ: Expanded SST comes into effect July 1
"The additional cost burden comes at a time when many businesses are already contending with rising operational expenses, including minimum wage adjustments, stamping of employee contracts and heightened regulatory compliance," it said in a statement on Friday (June 20).
"In the context of the supply chain from manufacturers and distributors to retailers, the increased cost of doing business is expected to translate into higher end prices for consumers," it added.
ALSO READ: Expanded SST will add RM5bil to national coffers in 2025, RM10bil in 2026
MRCA said retailers across the board may find it increasingly difficult to absorb these additional expenses, particularly with a weaker consumer sentiment amid expectations of gradual government subsidy removal.
MRCA said it will continue to engage with the Finance Ministry and relevant agencies to ensure that policy implementation remains balanced, transparent and conducive to the sustainable growth of the retail sector.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Malaysiakini
42 minutes ago
- Malaysiakini
SST: Firm welcomes govt's clarification on exemption mechanism for raw sugar
MSM Malaysia Holdings Bhd (MSM), the producer of the national refined sugar brand Gula Prai, welcomes the timely clarification issued today by the Finance Ministry regarding the sales and service tax (SST) treatment of raw sugar imports. The ministry's statement today confirmed that while a five percent sales tax will apply to raw sugar, a key input for refined sugar production, refiners may apply for tax exemptions under prescribed conditions...
The Star
an hour ago
- The Star
Property portfolio, data centres to lift SimeProp
CGSI Research said there would be a number of income streams for SimeProp. PETALING JAYA: Sime Darby Property Bhd 's (SimeProp) accelerating growth on the back of recurring income from the significant expansion of its investment property portfolio has CGS International Research (CGSI Research) reiterating its 'add' call on the stock with an unchanged target price of RM1.90. CGSI Research said there would be a number of income streams for SimeProp, including the recent acquisition of two double-storey logistics warehouses in Bandar Bukit Raja in Selangor that cost RM232mil. The research house said it estimates that the acquisition could contribute between RM7mil to RM8mil in net profit annually, assuming there is a 7% net property income yield. 'Furthermore, we gathered from management during the first quarter (1Q25) results briefing that the group has retained some of their commercial and industrial units to lift rental income,' the research house said. Among them is the KLGCC Mall in Kuala Lumpur that is set to open to the public in the second half of this year (2H25), further boosting the group's portfolio of retail assets. The property developer's commencement of built-to-lease data centres at Elmina Business Park in Selangor is also set to boost recurring income from next year (FY26) onwards. 'Phase one and two of the data centre assets are on track for completion by end-FY26 and 1H27, respectively. We project the investment property portfolio to contribute about RM119mil in net profit by FY27, making up 11% of the group's net profit,' CGSI Research said. However, the research house expects SimeProp to be negatively affected by the 6% sales and service tax (SST) on construction services, as it directly leads to higher construction costs for its commercial and industrial products. On a more promising note, construction as well as rental and leasing services for residential buildings, which account for over 50% of SimeProp's sales are exempted under the expanded SST, thus limiting the overall impact. This could result in SimeProp's profit margins remaining intact in the short term. 'Nevertheless, we do not rule out the risk of softer sales in its commercial and industrial segments as elevated property prices may temper buyer sentiment, potentially leading to deferred purchases or weaker property demand,' CGSI Research said. The research house said following a weaker 1Q25 for SimeProp, it now continues to anticipate stronger quarterly earnings for the group for the rest of FY25 as progress billings pick up pace. 'The valuation has also reverted to a palatable FY26 price-earnings of 15 times, which we deem compelling given the encouraging FY25 to FY27 earnings growth trajectory,' it said. The research house added downside risks include wider losses from the Battersea Power Station development in Britain and slower property launches, while re-rating catalysts were stronger sales growth and further expansion of SimeProp's data centre business. SimeProp's shares closed at RM1.42 in yesterday's trading.
New Straits Times
an hour ago
- New Straits Times
MSM's response to ministry's clarification on new levy on raw sugar
KUALA LUMPUR: MSM Malaysia Holdings Bhd (MSM) welcomes the timely clarification by the Finance Ministry today regarding the sales and service tax (SST) treatment of raw sugar imports. The ministry's statement confirms that while a 5.0 per cent SST will apply to raw sugar, a key input for refined sugar production, refiners may apply for tax exemptions under prescribed conditions. This clarification follows MSM highlighting the potential significant cost pressures arising from the expanded SST regime during its annual general meeting (AGM) on Thursday. The group had said the input cost increases could impact refined sugar pricing, which could push up prices of refined sugar for industrial buyers. MSM, in a statement today, said the ministry's prompt attention to the matter is especially important in the current challenging operating landscape, where retail sugar prices have remained capped at RM2.85 per kilogramme since 2011, despite significant increases in global raw sugar prices in recent years. MSM group chief executive officer Syed Feizal Syed Mohammad said the ministry's confirmation of an exemption application mechanism provides much-needed clarity and flexibility for refiners like MSM. "This enables us to proactively manage input costs and mitigates immediate pressure on refined sugar prices, while continuing to fulfil our role in the national sugar supply chain under the existing retail price framework," he added. The group remains committed to working closely with the government and all stakeholders to ensure minimal disruption to the supply chain and stable pricing for essential food industries. While input cost management remains a priority, MSM assures customers and partners of its relentless focus on operational efficiency and fair pricing. "We are confident that the exemption mechanism will contribute positively to safeguarding the competitiveness of Malaysia's food manufacturing sector," the company said.
