Construction tax threshold to remain at RM1.5 million, says Ahmad Maslan

This is the Ministry of Finance’s purview, and they would be aware of and understand the considerations for any such adjus
tment - July 28, 2025

Works Ministry has no current plans to raise the taxable service registration threshold for the construction sector from RM1.5 million to RM3 million

THE Ministry of Works has maintained that the current taxable service registration threshold for the construction sector will remain at RM1.5 million, with no immediate plans to raise it to RM3 million.

Deputy Minister Datuk Seri Ahmad Maslan said there had been no discussions to alter the existing threshold.

“At present, there are no discussions to increase the taxable service registration threshold for the construction sector to RM3 million, meaning the RM1.5 million threshold will remain in effect,” he said in the Dewan Rakyat on Monday.

He added that any revision to the threshold would fall under the jurisdiction of the Ministry of Finance. “This is the Ministry of Finance’s purview, and they would be aware of and understand the considerations for any such adjustment,” he said.

Ahmad was responding to a supplementary question from Abdul Latiff Abdul Rahman (PN–Kuala Krai), who had raised the issue of increasing the taxable threshold, particularly in sectors such as construction, leasing, and rentals.

Addressing an earlier question from Yusof Abdul Wahab (GPS–Tanjong Manis) on how the government plans to safeguard ongoing projects from the impact of the Sales and Services Tax (SST), Ahmad said that proactive measures had been taken to provide targeted exemptions for qualifying categories of construction projects.

These include construction services related to residential buildings and public facilities such as places of worship, public toilets, and recreational parks.

Selective Business-to-Business (B2B) activities are also exempted under specific conditions. Under the exemption structure, the main contractor is subject to service tax, but subcontractors are not. In addition, essential building materials such as cement, aggregate, and sand remain zero-rated under the sales tax to support industry needs.

“In line with the government’s commitment to implement SST fairly and efficiently, and to ensure a smooth transition for all parties, companies and contractors engaged in contracts that cannot be renegotiated will be granted a one-year exemption from service tax payments from the effective date, subject to stipulated conditions,” Ahmad said. - July 28, 2025