THE upcoming revision and broadening of Malaysia’s Sales and Service Tax (SST) framework reflects the government’s commitment to fair and progressive taxation, said Finance Minister II Datuk Seri Amir Hamzah Azizan.
Speaking in a post on LinkedIn, Amir Hamzah said the move demonstrates the government’s intent to strengthen public finances while ensuring vulnerable groups remain protected.
“As the government works towards the country escaping the middle-income trap, progressive taxation becomes an important tool for sustainable and inclusive growth,” he said.
“The approach is deliberately targeted where everyday Malaysians continue to enjoy zero per cent sales tax on essential and everyday goods: chicken, rice, vegetables, cooking oil, medicine, for instance.
“In addition, basic construction materials remain untaxed, and small businesses with revenue below key thresholds are protected through carefully calibrated exemptions,” he added.
The government had earlier announced on 9 June that the revised SST structure would take effect from 1 July 2025. Under the updated framework, the Sales Tax rate will remain unchanged for essential goods, while rates of either five or ten per cent will apply to non-essential or discretionary items.
The Service Tax, meanwhile, will see an expansion in scope to include sectors such as rental and leasing, construction, finance, private healthcare, education, and beauty services.
According to Amir Hamzah, the policy signals the maturing of Malaysia’s tax system into one that reflects values of shared prosperity and social fairness.
“Instead, we are asking those with greater capacity to contribute more, which is why discretionary luxury items and imported premium goods will bear modest tax rates,” he said.
“Top-tier private education and premium medical services for non-citizens will also be taxed, ensuring that only the wealthiest citizens and residents contribute their fair share to the country’s revenue base.”
He also highlighted that revenue raised through the expanded SST regime would be channelled directly into initiatives aimed at supporting the rakyat, including enhanced direct cash transfers through programmes such as Sumbangan Tunai Rakyat (STR) and Sumbangan Asas Rahmah (SARA), as well as improvements to public infrastructure and services.
“Since announcing the planned SST expansion in Budget 2025, we have conducted extensive stakeholder engagements with industry groups and tax practitioners. The result is a policy that is both fiscally responsible and socially conscious,” he said.
“It is not easy to balance between broadening the country’s revenue base while protecting the majority of Malaysians, but this latest announcement is a progressive step in that direction.” - June 11, 2025
