Latest news with #SalesandServicesTax
The Sun
42 minutes ago
- Business
- The Sun
Samenta seeks sectoral guidelines, higher threshold for SMEs in expanded SST implementation
PETALING JAYA: The timing and the manner of the implementation of the expanded Sales and Services Tax (SST) effective July 1 raise serious concerns for SMEs, said Small and Medium Enterprises Association Malaysia (Samenta). Its national president, Datuk William Ng, said while the intention to strengthen government revenue is understandable, SMEs are seriously concerned as they are already under tremendous pressure. 'SMEs are currently navigating a challenging operating environment marked by high input costs, tighter consumer spending, and softening external demand,' he said, adding that 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 it. Against this backdrop, Ng said, 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, he added. These increases, Ng said, will almost certainly be passed on to consumers, further driving up the cost of living. 'We urge the government to urgently reconsider the threshold for SMEs to minimise the impact on SME profitability and consumer prices. Specifically, we call for an exemption for micro and small enterprises as defined by SME Corp. or 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. Ng also urged the Royal Malaysian Customs Department (RMCD) to issue sector-specific guidance immediately to help impacted SMEs determine their obligations under the expanded scope, without having to consult tax agents. 'Without clarity, many SMEs risk accidental non-compliance, despite the enforcement grace period until the end of 2025.' He added that RMCD must also clarify whether, during this transition period, it is acceptable for businesses apply SST on the point of invoice, instead of point of collection. 'Many businesses would have issued invoice in prior months, creating uncertainty on tax liability under the expanded regime,' he noted. Ng said Samenta supports the development of a fair, progressive and transparent tax framework that broadens the base while protecting the country's entrepreneurial assets. However, he added, 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, we cannot consider it a consultation when it is presented as fait accompli,' said Ng. In light of heightened global uncertainties and domestic economic fragility – factors that were not as pronounced when Budget 2025 was tabled, Ng said, Samenta believes that a higher exemption threshold for SMEs is economically prudent. He said Samenta remains ready to collaborate with the government to ensure that fiscal reforms succeed without compromising the resilience and dynamism of the SME sector.
Borneo Post
4 hours ago
- Business
- Borneo Post
SST revision, expansion to have minimal impact on construction, consumer segment
The changes to the SST were drafted with the welfare of the majority of Malaysians in mind, particularly in the case of the consumer segment. – Bernama photo KUALA LUMPUR (June 10): The upcoming revision and expansion of Sales and Service Tax's (SST) scope is expected to have limited impact on the construction and consumer segments, according to Kenanga Investment Bank Bhd. However, the exercise is likely to have an adverse impact on the Real Estate Investment Trust (REIT) sector, as well as financial services and private healthcare, it said in a note today. It said the construction and consumer sectors were likely to be more insulated, noting that the changes to the SST were drafted with the welfare of the majority of Malaysians in mind, particularly in the case of the consumer segment. It also welcomed the fact that the revised SST framework remained mindful of potential cascading effects along the business supply chain. Meanwhile, Hong Leong Investment Bank Bhd believes that the expanded SST is a non-event for markets, as it is targeted in nature and deliberately structured to avoid essential goods and services. 'While sectors such as construction, banking, and healthcare may appear exposed, we expect any profit impact to be negligible,' it said in a separate note. It noted that in terms of construction services, most contract structures allow for cost pass-through mechanisms, and new project tenders are likely to be repriced, transferring the incremental cost to the end-customer. For financial services, it does not expect any material impact on banks, as they primarily serve as tax collection agents on behalf of the government. 'Nevertheless, we believe demand for these services will stay fairly inelastic, given limited substitutability,' it added. – Bernama construction consumer Sales and Services Tax
New Straits Times
7 hours ago
- Business
- New Straits Times
Tax institute lauds SST move as step toward fiscal resilience
KUALA LUMPUR: The Chartered Tax Institute of Malaysia (CTIM) has lauded the government's move to expand the Sales and Services Tax (SST) framework starting July 1, calling it a timely and strategic effort to enhance fiscal resilience. CTIM president Soh Lian Seng said the revision is a pragmatic step towards fiscal sustainability without reintroducing the Goods and Services Tax (GST) or raising direct taxes. "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," Soh said in a statement. He said the clarity provided through gazette orders was commendable and would aid businesses in understanding and complying with the new requirements. "The clarity through gazette orders and the targeted approach are commendable. We encourage continued engagement and practical support to help businesses adapt," he added. CTIM acknowledged the short lead time before implementation and urged affected businesses to act promptly to register or update their systems, noting that the July rollout was aligned with the remaining taxable periods for the year. To facilitate a smooth transition, CTIM called on the government to set up dedicated support channels, such as hotlines, email services or live chats, staffed by knowledgeable personnel to provide timely guidance and reduce compliance risks. The institute also welcomed the issuance of transitional rules and guidance to support businesses but stressed the need for continued dialogue with authorities to resolve potential implementation challenges. "CTIM stands ready to explain the government's initiatives and offer constructive feedback where improvements are possible," said Soh.
New Straits Times
9 hours ago
- Business
- New Straits Times
SST expansion unlikely to derail construction growth: Analyst
KUALA LUMPUR: The expanded Sales and Services Tax (SST) is expected to have a limited impact on the construction sector, with exemptions and transitional relief cushioning the effects for most players, said RHB Investment Bank Bhd. In a research note today, the firm maintained its 'Overweight' call on the sector, citing continued momentum in data centre construction and targeted tax exemptions under the revised SST regime. "The Finance Ministry's move to broaden the SST to include construction services, among others, is not entirely unexpected," said analyst Adam Mohamed Rahim. "While a six per cent service tax will be imposed on contractors with annual revenue exceeding RM1.5 million, exemptions for residential and public housing projects, along with business-to-business transactions, should help mitigate the impact," he said. RHB Investment said contractors focused on the residential segment such as MGB Bhd and Kerjaya Prospek Group Bhd are unlikely to be affected. In contrast, those involved in commercial, industrial and infrastructure projects, including Gamuda Bhd, Sunway Construction Group Bhd and IJM Corp Bhd, will fall under the new tax scope. It added that most contractors are expected to incorporate the tax into new bids or revise project values, provided the contracts allow for such adjustments. "Non-reviewable contracts, those without provisions to revise the contract sum, will be granted a 12-month exemption from the implementation date," the research firm said. RHB Investment cited Sunway Construction's RM3.9 billion data centre contract in Johor, 44 per cent of its data centre order book, as potentially exempt if deemed non-reviewable and completed within 12 months. It also downplayed concerns over rising costs, noting that a hypothetical RM180 million in SST across three RM1 billion projects would amount to just 0.2 per cent of full-year earnings for hyperscalers like Google or Microsoft. "The sector's data centre theme remains intact. The SST revision is unlikely to derail investment or construction activity in this space," Adam said. However, RHB Investment warned that any future expansion of the SST to include basic construction materials or residential projects would pose a downside risk.
Borneo Post
12 hours ago
- Business
- Borneo Post
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
