What's new in the expanded SST starting July 1?
KUALA LUMPUR: The government is expanding the Sales and Service Tax (SST) to make the system more targeted and fair, focusing on those who spend more on non-essential goods and services. Here's what's changing:
1. More services will be taxed
Six new categories of services will be subject to the service tax, namely leasing and rental, construction, finance, private healthcare, education, and beauty services. These will be taxed at varying rates between six and eight per cent, with thresholds and exemptions in place to safeguard lower-income groups and small businesses.
2. Essentials stay tax-free
Basic goods like rice, cooking oil, sugar, milk, medicines, books and even building materials such as cement and sand remain under the zero per cent sales tax. No changes there, your everyday needs won't cost more because of SST.
3. Luxury items face higher tax
Goods like imported fruits, king crab, truffle mushrooms, silk fabric, racing bikesand antique paintings will now be taxed at five or 10 per cent, depending on the item. These are considered non-essential.
4. What's taxed and what's not, in the new service categories
• Leasing and rental: Taxed at eight per cent if annual income exceeds RM500,000. But residential rentals and small businesses are exempt.
• Construction: Taxed at six per cent for contracts above RM1.5 million. Public housing and residential buildings are exempt.
• Finance: Fee-based services taxed at eight per cent, but basic banking, Islamic finance and remittances are not affected
• Private healthcare: Only non-citizens will pay a six per cent tax. Malaysians are exempt, including for traditional medicine like Chinese, Malay and Indian therapies.
• Education: A six per cent tax applies to private schools charging over RM60,000 per student annually and higher education for international students. Malaysians and persons with disabilities are exempt.
• Beauty services: Taxed at eight per cent if a business earns over RM500,000 a year. This includes facial treatments and hair salons.
5. Grace period for businesses
No penalties or enforcement until Dec 31, 2025, giving businesses time to adapt.
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