THE government anticipates an additional RM5 billion in Sales and Service Tax (SST) revenue in 2025, with the figure projected to rise to RM10 billion in 2026, following a comprehensive revision and expansion of the tax scope, effective 1 July 2025.
According to Treasury secretary-general Datuk Johan Mahmood Merican, the review is part of a targeted strategy to broaden Malaysia’s revenue base while maintaining a progressive tax framework.
“The government has taken a progressive approach by expanding the tax base, with the tax burden being skewed towards those who can afford it,” he told Bernama during a visit to the Royal Malaysian Customs Department.
“This means that when determining the scope and those who are subject to the Service Tax, as well as the Sales Tax approach, efforts have been made to ensure it is implemented in a targeted manner,” Johan added.
Previously, Finance Minister II Datuk Seri Amir Hamzah Azizan had stated that SST collections in 2025 were expected to reach RM51.7 billion, up from the earlier projection of RM46.7 billion.
The revised SST framework includes maintaining current tax rates for essential goods, while discretionary and non-essential items will be subject to either a 5% or 10% sales tax. The scope of the Service Tax will also widen to cover leasing, construction, financial services, private healthcare, education, and beauty-related services.
To facilitate a smooth transition, Johan noted that affected companies will only be required to begin charging the Service Tax in September.
“In July, service providers would need to establish whether they have reached the annual revenue threshold that makes them subject to the Service Tax. At the end of the month, they need to review their position to ensure eligibility. If the revenue threshold is reached, the registration process begins in August; and only after that will invoices be issued for the taxable services provided,” he explained.
The government maintains that the expanded SST will support development efforts and fiscal sustainability without overburdening the lower-income population. - June 18, 2025
