View revised SST in broader fiscal context, tax expert tells M'sians
Basic necessities will continue to be exempted from sales tax, but a 5-10% rate will be imposed on non-essential items.
KUALA LUMPUR : The revision of sales tax rates and the expansion of the service tax scope form part of targeted fiscal measures to keep the nation's finances on a sustainable path, say tax experts.
PwC Malaysia tax leader Steve Chia said the review of the sales and service tax (SST) was expected, having been announced in the 2025 budget last October, and urged the public to view it in a broader fiscal context.
'While it is aimed at supporting the medium-term fiscal goals, a search for a longer-term solution remains necessary to ensure sustainable revenue contributions for the country.
'Although the current expansion is relatively broader, the government is committed to containing the scope to selected and non-essential goods and business-to-business (B2B) services to ensure the rakyat will not be burdened,' he told Bernama.
Finance minister II Amir Hamzah Azizan had announced that the government would implement the revised SST from July 1 to strengthen the country's fiscal position and improve support for public welfare.
Chia said a key challenge would be ensuring cascading costs are either eliminated or not passed along the value chain.
'Since the budget was announced, the government has made efforts to engage the relevant stakeholders, including industry associations and tax professionals, to ensure the revisions are well-informed and the impact on industries are taken into consideration.
'Therefore, the change is aimed at strengthening Malaysia's fiscal position by increasing revenue and broadening the tax base.
'We can see that the government is careful in identifying areas for rate increases and scope expansion to protect and cushion the impact on the rakyat at large.'
KPMG Malaysia's head of tax Soh Lian Seng however said the current SST framework is often viewed as less comprehensive than the previous goods and services tax (GST) scheme.
'This revision appears to be an effort to make the tax structure more progressive, broadening the base while ensuring the burden does not disproportionately fall on the rakyat.
'Expanding the scope of taxable services and revising rates can help improve revenue collection, which is essential for Malaysia's medium-term fiscal consolidation,' he said.
Soh said the government is likely aiming to enhance fairness and efficiency in tax collection by refining the scope and structure of the SST.
Soh said there may be a short-term spike in consumer spending as people rush to make purchases before the new rates take effect, similar to what was observed in 2015 ahead of the GST's implementation.
'However, this is likely to normalise within the next few months. In regard to concerns about inflation, the impact should be modest.
'While there are exemptions and reliefs in place to cushion the impact, the net effect should still contribute positively to government coffers, supporting broader fiscal sustainability,' he added.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Malay Mail
2 hours ago
- Malay Mail
New electricity tariff ‘demonstrates reform' in energy sector, says Fahmi
KUALA LUMPUR, June 22 — The implementation of the new electricity tariff schedule starting July 1 is a clear reflection of the major reforms being undertaken by the government, particularly in the national energy sector, said Communications Minister Datuk Fahmi Fadzil. Fahmi, who is also the Madani Government spokesperson, said the initiative aligns with the National Energy Transition Roadmap (NETR), which aims to increase the use of renewable energy (RE) and reduce carbon emissions by 2050. 'Under the new tariff schedule, 85 per cent of domestic consumers or account holders are expected to enjoy the same, or even lower, electricity rates starting July 1, 2025, provided their monthly usage does not exceed 1,000 kilowatt hours,' he said. 'This is one of the key reforms being advanced in a coordinated manner by the government, together with the Ministry of Energy Transition and Water Transformation (Petra), the Energy Commission (ST), and Tenaga Nasional Berhad. It demonstrates that efforts to implement renewal or reform can still deliver tangible benefits to the people,' he said. Fahmi said this to reporters at the Federal Territories of Kuala Lumpur and Putrajaya's Kita Madani Carnival at IWK Eco Park, Pantai Dalam, here today. Also present was Information Department director-general Julina Johan. On Friday, the ST announced that more than 23.6 million domestic users in Peninsular Malaysia will benefit from fairer and more progressive electricity rates due to the newly approved electricity tariff schedule approved by the government. ST, in a statement, said that this tariff determination will take effect from July 1, 2025, to December 31, 2027, under the Incentive-Based Regulation (IBR) framework, in line with the provisions of Section 26, Electricity Supply Act 1990. It said that the electricity tariff changes for the Regulatory Period 4 (RP4) involve the restructuring of the following three components, namely the average base tariff rate; the new tariff schedule; and the fuel cost adjustment mechanism. The Average Base Tariff Rate for the RP4 period has been set at 45.40 sen/kWh, slightly lower than the 45.62 sen/kWh approved in December 2024 — reflecting an overall reduction of up to 19 per cent in the average electricity tariff compared with RP3. Earlier, Fahmi, who is also the Member of Parliament for Lembah Pantai, officiated the Kita Madani Carnival, which aims to bring the community closer to government services through a casual, informative programme that highlights current issues, policies, and initiatives in line with the Malaysia Madani concept. The programme, among other things, featured Rahmah Madani Sale and Agro Madani sale, sports competitions for children, as well as exhibitions involving 21 government agencies, including counters for traffic summons payments and driving licence renewals. — Bernama
Free Malaysia Today
2 hours ago
- Free Malaysia Today
Umno ministers outperforming those from PKR and DAP, says Shahrir
Former Johor Bahru MP Shahrir Samad said PKR leaders have 'no real experience' in governing the country. (Bernama pic) PETALING JAYA : An Umno veteran claims that ministers from his party are doing better than their fellow Cabinet members from DAP and PKR. Shahrir Samad, who had held several Cabinet posts, said it cannot be denied that Umno leaders serving as ministers in the Anwar Ibrahim-led unity government are performing better and more effectively compared with those from DAP and PKR, Utusan Malaysia reported. 'This is because Umno leaders are trained and shaped through a grassroots leadership development process, rising through the ranks over time,' he was quoted as saying in an interview with the daily. In contrast, he said, many leaders from PKR and DAP lack such experience. He cited how DAP leaders may have been in politics for a longer period and were expected to be more seasoned, but still fell short. Giving Lim Guan Eng as an example, Shahrir said the former DAP chairman did not always 'reflect maturity or wisdom in leadership' both as finance minister and Penang chief minister. 'PKR leaders, in particular, have no real governing experience. So, when they are appointed ministers, the country ends up in disarray,' he said. 'We even have situations where (their) ministers want to resign but first take leave, as if a political post was a corporate job that requires a three-month notice period. This shows a fundamental misunderstanding of political office. 'If you intend to resign, just resign. There's no need to take leave,' he said, claiming that the prime minister's decision to find a replacement or reshuffle the Cabinet was stalled because of such ministers taking leave. PKR's Pandan MP Rafizi Ramli resigned as the economy minister after he lost the party deputy presidency to Nurul Izzah Anwar last month. Nik Nazmi Nik Ahmad, the Setiawangsa MP, also let go of his natural resources and environmental sustainability portfolio after he failed to defend his PKR vice-presidency. Both submitted their resignation letters on May 28 and went on leave – with Rafizi's leave ending on June 16, and Nik Nazmi's on July 3. Prime Minister Anwar Ibrahim had expressed hope that the duo would reconsider their resignations, but both remained steadfast in their decisions.
Malay Mail
4 hours ago
- Malay Mail
Tengku Zafrul: Malaysia, US aim to seal tariff deal before 90-day clock runs out
KUALA LUMPUR, June 22 — Malaysia's discussions with the United States (US) Trade Representative and the US Secretary of Commerce on ongoing tariff-related negotiations have made good progress, said Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz He said both Malaysia and US representatives have expressed their intention to finalise negotiations before the expiry of the 90-day pause on tariff implementation, and agreed to intensify efforts to reach an agreement acceptable to key stakeholders in both countries. In a statement today, he highlighted that the US has been one of Malaysia's top three export markets over the past decade. 'In May 2025, exports to the US recorded the eighth consecutive month of double-digit growth,' he said. A significant share of Malaysia's exports to the US supports and complements US domestic industries in sectors such as electrical and electronics (E&E), semiconductors, medical devices, machinery, equipment, and parts. Malaysia also serves as a key supplier of intermediate goods to US-based manufacturing industries. 'MITI has remained steadfast in upholding Malaysia's interests in all trade and investment relations, particularly in safeguarding the integrity of Malaysia's domestic commitments and sovereign rights,' he added. He further stated that MITI anticipates the negotiations will help secure Malaysia's supply chains and deliver positive spillovers to local businesses, especially small and medium enterprises (SMEs), while also creating more high-paying jobs for Malaysians. 'These efforts will further strengthen Malaysia's position as a preferred investment destination in the region and drive the Madani economic transformation agenda towards becoming a high-tech, high-income nation,' said Tengku Zafrul. Tengku Zafrul led a working visit to Washington, US, from June 18-20, 2025. The visit focused on continuing US tariff-related engagement and negotiations with US Trade Representative Jamieson Greer and US Secretary of Commerce Howard Lutnick. He was accompanied by MITI's chief negotiator, the Deputy Chief of Mission from the Embassy of Malaysia, and MITI officials based in Washington. — Bernama
