By DayakDaily Team
KUCHING, June 9: The Sales and Service Tax (SST) will be expanded to cover more services starting July 1, 2025, but the majority of essential goods and key services used by everyday Malaysians will remain exempt to avoid burdening the public.
The Ministry of Finance (MOF) today announced that the revised SST structure is part of the Madani Government’s move to strengthen the country’s fiscal position without worsening the cost of living or placing undue pressure on households.
“To ensure that the majority of Malaysians are not affected by the SST adjustments, the Madani Government has adopted a targeted approach by exempting essential goods and services from taxation.
“In addition, various relief measures are in place to minimise the impact on micro, small, and medium enterprises (MSME),” said Finance Minister II Senator Datuk Seri Amir Hamzah Azizan in the statement.
Under the revised framework, daily essential goods that will continue to be exempted from Sales Tax include chicken, beef, mutton, fish, prawns, squid, vegetables, local fruits, rice, barley, oats, wheat, flour, canned sardines, sugar, salt, white bread, pasta, vermicelli, noodles, instant noodles, milk, cooking oil, medicine, medical devices, books, journals, newspapers, and pet food.
The zero per cent Sales Tax rate is also retained for basic construction materials such as cement, stones, and sand, as well as agricultural inputs including fertiliser, pesticides, and agricultural and livestock machinery.
Similarly, basic banking services, public and private healthcare for Malaysians, traditional and complementary medicine, and higher education for locals will not be taxed under the expanded Service Tax scope.
However, the scope of the Service Tax will be extended to six new categories: leasing or rental, construction, financial services, private healthcare, education, and beauty services.
These services will only be taxed if the providers exceed certain revenue thresholds—RM500,000 or RM1.5 million annually, depending on the category.
Leasing or rental services, for instance, will be taxed at 8 per cent, but exemptions will apply to residential property rentals, reading materials, MSMEs (micro, small and medium enterprises), and financial leases.
Construction services will see a 6 per cent tax imposed only on contractors with annual revenue above RM1.5 million, with exemptions for residential buildings and housing-related public amenities.
In the financial sector, only fee- or commission-based services will be subject to tax, while essential financial services such as basic banking, Islamic financing, foreign exchange transactions, and remittance services remain exempt.
Private healthcare services provided to foreigners will be taxed at 6 per cent, but all such services—including traditional and allied health services—will remain tax-free for Malaysian citizens. The government also clarified that physiotherapy, audiology, and speech therapy for Malaysians will not be taxed, in response to public concern.
Private preschools, primary and secondary schools that charge over RM60,000 in annual tuition fees per student will be subject to a 6 per cent tax, though the impact is expected to be limited to a small number of premium institutions. Education services for children with disabilities (OKU) and all higher education services for Malaysians are exempt.
Meanwhile, beauty services such as facial treatments and hairdressing will be taxed at 8 per cent if providers reach RM500,000 in annual revenue.
To allow companies time to comply with the updated requirements, the government will not impose any penalties or prosecution for non-compliance until December 31, 2025, provided businesses take steps to register and fulfil SST obligations.
Further details, including legislation, guidelines and FAQs, will be published via the official platforms of the Ministry of Finance (MOF) and the Royal Malaysian Customs Department. – DayakDaily
