Lee Hishammuddin Allen & Gledhill

[TAX, CUSTOMS & TRADE] Adjustments to SST Expansion Ahead of 1 July 2025

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On 27 June 2025, the Ministry of Finance (“MOF”) announced several targeted adjustments to the Sales Tax and Service Tax (SST) expansion framework, in response to feedback from the public, industry stakeholders, and Members of Parliament¹. These revisions aim to mitigate the impact of the SST expansion on basic consumption and small businesses. The key changes will take effect from 1 July 2025:

A. Sales Tax: Exemption for Certain Imported Fruits

The following imported fruits will be exempted from sales tax:

  • Apples
  • Oranges
  • Mandarin oranges
  • Dates

 

B. Service Tax: Threshold Increase and Scope Clarification

1. The annual registration threshold for service tax will be increased from RM500,000 to RM1 million for the following sectors:

  • Rental or leasing services (Group K – 8%)
  • Financial services (Group H – 8%)

2. The MOF has further confirmed that beauty services (e.g., manicure and pedicure, facial services, barbers, and hairdressers) will not be included as taxable services under Group C.

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C. Key Takeaways for Businesses

1. Stay vigilant for further updates

  • The latest adjustments have not yet been incorporated into the gazetted Orders. Businesses should continue to monitor any new gazette orders, announcements, FAQs, or updated guidelines from the Royal Malaysian Customs Department (“RMCD”) or MOF in the lead-up to and after 1 July 2025 to ensure ongoing compliance.

2. Reassess registration obligations

  • Businesses providing rental or leasing and financial services should reassess their annual taxable turnover to determine whether they exceed the revised RM1 million service tax registration threshold. Those falling below the threshold will no longer be required to apply for registration, provided that they are not offering other newly taxable services. For further details on the other newly taxable services effective from 1 July 2025, please refer to our earlier alert dated 16.6.2025 here.

 

For any inquiries, please contact Partner Ivy Ling Yieng Ping (il@lh-ag.com).

REFERENCE

[1] https://www.mof.gov.my/portal/en/news/press-release/revision-to-the-expanded-sales-tax-and-service-tax-take-into-account-public-and-industry-feedback

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