Retailers urge government to scrap SST on commercial rentals
KUALA LUMPUR: The Malaysia Retailers Association (MRA) has urged the Finance Ministry to revoke the planned eight per cent Sales and Service Tax (SST) on commercial rental and leasing services.
Its president Datuk Andrew Lim Tatt Keong said the additional levy could strain business sustainability and fuel consumer price increases.
He said retailers are already grappling with a raft of cost pressures, including the minimum wage hike to RM1,700, rising electricity tariffs, stamp duties on employment contracts, fuel subsidy rationalisation, and the earlier SST rate increase from six to eight per cent.
"These are just a few examples of rising fixed operational costs. Even these alone are already impacting business sustainability and bottom lines," he said in a statement today.
Lim added that the retail sector was not consulted prior to the decision to impose SST on commercial rentals, despite rental being among the largest fixed costs for many businesses.
"It is unrealistic to expect retail businesses to absorb the full impact, and many may have no choice but to pass these costs on to consumers, contributing to inflation and intensifying the rakyat's cost-of-living burden," he said.
He also pointed to growing global uncertainties, particularly the recent conflict escalation between Iran and Israel, as further reason to reconsider the timing of the tax.
In response, the MRA proposed several measures. These include a complete waiver of the SST on commercial rentals or, at the very least, a deferral until both global and domestic conditions are more stable.
The association also called for the tax to be fairly shared between landlords and tenants, rather than borne entirely by retailers.
It urged that service charges and shared area fees be excluded from the tax scope and that the SST exemption threshold be raised to RM2 million in annual sales to protect small and independent retailers.
Additionally, the MRA suggested delaying implementation until after Visit Malaysia Year 2026 and introducing the tax gradually, starting at three per cent and increasing progressively to eight per cent over five years.
Lim said the retail sector plays a vital role in driving domestic economic growth and employment, and stressed that policies affecting the sector must be implemented with transparency, fairness and proper stakeholder engagement.
He added the MRA is open to further discussions with the Finance Ministry to find a balanced and sustainable approach that supports both businesses and consumers.
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