The Malaysian government has revised its Sales and Service Tax (SST) expansion plan, incorporating exemptions for certain imported fruits. Effective July 1, this policy shift follows feedback from the public and businesses, intending to alleviate financial pressure on consumers and small enterprises while maintaining a progressivity in the tax framework.
Imported apples, oranges, mandarin oranges, and dates are now exempt from SST. This was confirmed in announcements by Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim. The Ministry of Finance (MOF) further assured that essential local produce like rice, chicken, beef, vegetables, eggs, and commonly consumed fish varieties will continue to be exempt from the sales tax.
Economist Geoffrey Williams noted that the SST revisions are of a minor scope and would not affect the government's annual RM10 billion (USD 2.12 billion) revenue target. The amendments are viewed as supportive of inflation control and as part of a responsible fiscal policy without burdening consumers excessively.
Part of a broader SST revision previously announced on June 9, 2025, the adjustments include tax rates ranging from 5% to 10% on non-essential goods. Initial plans to expand the scope of service tax across six new categories, such as private healthcare, education, and beauty services, saw changes, with the tax on beauty services like manicures, facials, barbering, and hairdressing being shelved.
Moreover, the MOF increased the service tax registration threshold for leasing, rental, and commission-based financial services from RM500,000 (USD 106,000) to RM1 million (USD 212,000) to bolster support for micro, small, and medium enterprises (MSMEs).
Despite these exemptions, the government remains optimistic about its revenue targets, aiming for RM5 billion (USD 1.06 billion) in SST collections for the remaining half of 2025 and RM10 billion (USD 2.12 billion) for 2026. Williams remarked that these revisions mirror a tax strategy prioritizing consumer interests, aligning with long-term objectives to bolster public services in sectors like health, education, and social protection.
Carmelo Ferlito, CEO of the Center for Market Education, emphasized the necessity of clarity in tax rollout to avert confusion and loopholes. He highlighted the importance of simplicity and equity in tax policies and urged the government to focus on controlled spending to curb inflation risks.
According to Ferlito, while SST adjustments themselves may not trigger inflation, unchecked government expenditures have the potential to do so, underscoring the need for disciplined fiscal management in tandem with tax reforms.
Source 1: FMT
Source 2: Malay Mail
