Putrajaya asked to exempt micro, small enterprises from July's SST revision
Datuk William Ng
KUCHING (June 10): The Small and Medium Enterprises Association of Malaysia (Samenta) has called for micro and small enterprises to be exempted from the revised Sales and Services Tax (SST).
Samenta president Datuk William Ng said the revised SST, which is set to take effect on July 1, should only cover medium and larger businesses.
'At the very least, a revised threshold of RM2 million in annual turnover, up from the current RM500,000, to ensure that only medium and larger businesses fall within the expanded scope,' he said in a statement today.
The statement was in response to the announcement by Finance Minister II Datuk Seri Amir Hamzah Azizan that the expanded SST will cover six new categories of services namely leasing, construction, finance, private healthcare, education, and beauty.
Under the expanded scope, service tax will now apply to leasing services at a rate of 8 per cent for companies with annual leasing revenue above RM500,000.
Ng said SMEs in Malaysia are currently navigating a challenging operating environment marked by high input costs, tighter consumer spending, and softening external demand.
He pointed out the upcoming expiration of the United States' reciprocal tariff pause on July 8 threatens to further dampen Malaysia's export competitiveness and expose SMEs to retaliatory trade measures at a time they can least afford.
'Against this backdrop, the expansion of SST without sufficient exemptions or a higher threshold for SMEs risks compounding the cost burden on businesses that are least equipped to absorb it. This impact is not limited to raw material costs but extends to rent and business-to-business services that will now fall under the SST's expanded scope.
'These increases will almost certainly be passed on to consumers, further driving up the cost of living,' he said.
He also urged the Royal Malaysia Customs Department to immediately issue sector-specific guidelines to help SMEs determine their tax obligations under the expanded scope.
'Without clarity, many SMEs risk falling into unintentional non-compliance, despite the enforcement grace period until the end of 2025,' he said.
He also called on Customs to clarify whether, during this transition period, it is acceptable for businesses to apply SST on the point of invoice, instead of point of collection.
'Many businesses would have issued invoices in prior months, creating uncertainty on tax liability under the expanded regime,' he added.
While Samenta supports the idea of a fair and progressive tax system, Ng said this must be done in a calibrated manner with genuine stakeholder consultation and alignment with current economic realities.
'While we were given a briefing on the expanded SST, they cannot consider this a consultation when it is presented as 'fait accompli',' he added. lead Sales and Services Tax Samenta William Ng
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