THE revised sales tax regime, which exempts essential goods from the five per cent levy, is expected to have a “neutral” effect on the consumer, construction and plantation sectors, according to Maybank Investment Bank Bhd (Maybank IB).
In a research note issued today, the bank said the zero per cent tax rate on essentials—such as staple food items, medical devices and educational materials—alongside various relief measures, is intended to cushion businesses and shield the public from rising costs.
“Essential goods including key food items, medical devices, and educational materials are exempted, and various relief measures have been introduced to cushion the impact on businesses, with the aim of keeping the majority of Malaysians unaffected,” it said.
The expansion of the service tax scope, which now includes sectors such as leasing, construction, financial services, private healthcare, education and beauty services, was also assessed to be largely “neutral” due to specific exemptions.
Maybank IB noted that sectors such as plantations, oil and gas, petrochemicals, technology—including semiconductors, software, and electronics manufacturing services—automotive, utilities, telecommunications, gaming, media and gloves would see no direct impact from the revised taxes.
While the construction sector itself remains largely unaffected, Maybank IB believes the property sector could bear indirect consequences. Construction services for infrastructure, commercial and industrial buildings will incur a six per cent service tax if the taxable value exceeds RM1.5 million annually.
“This is expected to raise property developers’ operating costs. While property developers could pass such costs to buyers, it would depend on the ability to price up their products, which in turn will ultimately depend on market acceptance and demand,” the bank said.
On inflation, Maybank IB projected that the overall impact of the revised sales and service tax regime would be relatively limited, with headline inflation expected to rise by no more than 0.25 percentage points.
Factoring in the combined effects of tax adjustments, labour-related costs—including minimum wage revisions, EPF contributions for foreign workers and levies—RON95 fuel subsidy rationalisation and Tenaga Nasional Bhd’s anticipated tariff review, the bank maintained its 2025 inflation forecast at two per cent.
“We believe weighing exemptions available and cost pass-throughs would be crucial to managing the inflationary impact,” it said. - June 11, 2025
