Latest news with #JohanMahmoodMerican
Sinar Daily
a day ago
- Business
- Sinar Daily
Expanded SST not new tax, just smarter one, says Treasury sec-gen
SHAH ALAM - The expanded sales and service tax (SST) set to take effect from July 1, 2025 is not a new tax imposed on everyday goods despite the common misconception, but a carefully considered extension of the existing tax framework. Secretary General of Treasury Datuk Johan Mahmood Merican said SST was aimed at improving national fiscal stability without overburdening the public. Clarifying public confusion over the SST expansion, Johan stressed that only about 3,332 new items were being added to the list of taxable goods and services. This represented just 20 per cent more than the existing 6,297 taxable items. "The expansion is being misunderstood as a new tax. "But the reality is many of these items have been subject to SST all along — just not visible to consumers because the tax was absorbed at the manufacturer or supplier level," he said. Chief Secretary of Treasury Datuk Johan Mahmood Merican visiting the Customs Call Centre under the Corporate Planning Division at the Royal Malaysian Customs Department, Kuala Lumpur on Wednesday. He added that the confusion was exacerbated by viral claims on social media suggesting that bizarre items such as seawater, human hair and bones were being taxed. "This tax domain is technical. Yes, these terms exist in the gazette, but they refer to industrial inputs, not items meant for daily consumption," he said. In response to claims that seawater is being taxed, Johan clarified that the items listed in the Customs gazette pertained to pharmaceutical-grade seawater, not ordinary seawater from local beaches. Similarly, human hair was only taxed if it was imported for wig-making or industrial use, not from local barbershops. "Table salt that Malaysians use every day remains tax-free. Only certain premium or industrial salts are taxed. "The same applies to milk, sugar, bread and other essentials — all remain zero-rated," he said. He added that while optional dairy products like yoghurt and butter were taxed at five per cent. This, he said has been in place under the previous SST framework. He said these were not new additions adding that consumers may just now be realising it due to the public attention. Chief Secretary of Treasury Datuk Johan Mahmood Merican during his visit to the Customs Call Centre under the Corporate Planning Division at the Royal Malaysian Customs Department, Kuala Lumpur on Wednesday. While some economists and business groups advocate a return to the goods and services tax (GST) due to its comprehensiveness and higher potential revenue, Johan said SST was a more progressive and balanced approach at this time. "If we reinstated GST, it would generate over RM20 billion annually. "But SST expansion is projected to bring in around RM10 billion for a full year — less than half of GST," he said. He added that GST, by design, passed the full tax burden to the end-user consumer, making it favourable for businesses but more costly for everyday Malaysians. As such, he said the government should widen the revenue base without disproportionately impacting the people or the economy instead. Items newly taxed under the SST included imported fruits and premium seafood such as salmon, cod, lobster and king crab, which will now carry a five per cent tax. These goods, by default, were considered non-essential and as seen in the country's current economic landscape, alternatives existed. "For instance, local fruits remain zero-rated and there's an opportunity here to stimulate local production. "In cases where local supply is insufficient, such as coconuts, imported versions are still tax-free," he said. He dismissed rumours that common seafood like mackerel or tuna would be taxed, further affirming that basic seafood items — prawns, squid, mackerel — all remained zero-rated. Beyond the horizon, Johan assured that the SST expansion will not significantly affect inflation, with the impact estimated at around 0.25 per cent — in line with government projections. "These figures are based on detailed modelling. The idea is to raise essential revenue while ensuring affordability," he said. The additional revenue will in turn support critical government programmes, including Sumbangan Asas Rahmah (SARA) which provided RM100 monthly to over five million Malaysians. Despite an overall positive outlook thus far, one area of concern has been the inclusion of rental and logistics services under SST, which some feared could increase consumer prices. To clear any lingering doubts, Johan said rental services were only taxed for businesses earning over RM500,000 annually, thereby exempting small traders. Chief Secretary of Treasury Datuk Johan Mahmood Merican during an interview with Sinar. Business-to-business exemptions were in place to avoid double taxation, such as between shopping malls and anchor tenants. "For example, if a mall rents to a department store, that transaction is taxed. But smaller kiosks operating under the department store will not face an additional tax," he said. Summing up the rationale behind the expanded SST, Johan said the government has adopted a "targeted, progressive" tax strategy that supported national fiscal policy while protecting lower-income households. "The idea is not to burden the people but to empower the government to fund better public services. "We must be realistic about our country's fiscal needs. But at the same time, we are ensuring basic needs are protected and that choices exist for consumers to avoid any additional cost," he said.
Malaysiakini
a day ago
- Business
- Malaysiakini
Treasury sec-gen urges builders to avoid cutting corners as SST looms
Treasury secretary-general Johan Mahmood Merican has strongly urged construction industry players to maintain professionalism and integrity, warning against using the expanded sales and service tax (SST) to justify compromised work quality. His remarks follow reported concerns from industry associations that the revised tax regime will drive contractors towards cheaper alternatives.
The Sun
3 days ago
- Business
- The Sun
Fiscal reform to balance financial sustainability, social equity: Treasury sec-gen
KUALA LUMPUR: The government's fiscal reform initiatives, including expanding the scope of the Sales and Services Tax (SST) and rationalising electricity and diesel subsidies, are aimed at ensuring fiscal sustainability while protecting lower-income groups and essential sectors. Treasury secretary-general Datuk Johan Mahmood Merican said one of the key fiscal reform elements is the Fiscal Responsibility Act, which aims to reduce the government's fiscal deficit to 3.8% of gross domestic product (GDP) in 2025 and to 3% by 2028. He said that what has gained attention in recent weeks is SST, and the idea is to approach it in a more targeted manner, which Prime Minister Datuk Seri Anwar Ibrahim said reflects the spirit of social protection. 'How do we then try to approach it more progressively? It is the government that needs to provide additional funding. 'We need to increase our tax base as our tax-to-GDP (ratio) is about 12.5%, which is amongst the lowest in this region,' he said during a session titled 'Social Safety Nets: Securing the Future' at the Sasana Symposium 2025 hosted by Bank Negara Malaysia yesterday. Johan said there is room to increase the tax base for the sustainability of expenditure, as well as growing demands for social protection and basic infrastructure. Thus, there is a need to increase the tax base in a progressive manner, where the government must ensure that basic daily goods are not subject to higher SST. He also noted that from an equity standpoint, it appears highly counterintuitive to allocate the same amount of assistance to both low-income and high-income individuals. As such, the government typically adopts a more targeted approach as part of its broader reform agenda to ensure that aid reaches those who need it most. He noted that the government allocated RM10 billion for Sumbangan Tunai Rahmah in 2024, and this year the allocation has increased to RM13 billion, which includes another aid assistance programme called Sumbangan Asas Rahmah. Meanwhile, he stated that while a progressive wealth tax is intellectually appealing and aligned with Islamic principles such as zakat, it presents major challenges in terms of administration, enforcement and data availability. He explained that income and consumption taxes are easier to manage due to the regular and traceable transactions, whereas wealth is harder to assess and value. At a separate event, Johan said SST collection is expected to increase by RM5 billion in 2025 and by RM10 billion in 2026 following the review and expansion of the tax's scope, which will be implemented starting July 1. He said the additional amount is due to the SST review aimed at broadening the national revenue base. 'The government has taken a progressive approach by expanding the tax base, with the tax burden being skewed towards those who can afford it. 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,' he told Bernama after a visit to the Royal Malaysian Customs Department in Petaling Jaya. The scope of the Service Tax will be expanded to include new services such as leasing or rental, construction, financial services, private healthcare, education, and beauty services. – Bernama
The Sun
3 days ago
- Business
- The Sun
Govt expects additional SST revenue of RM5b in 2025, RM10b in 2026 following revision
PETALING JAYA: The Sales and Service Tax (SST) collection is expected to increase by RM5 billion in 2025 and by RM10 billion in 2026 following the review and expansion of the tax scope, which will be implemented starting July 1. Treasury secretary-general Datuk Johan Mahmood Merican said the additional amount is due to the SST review aimed at broadening the national revenue base. 'The government has taken a progressive approach by expanding the tax base, with the tax burden being skewed towards those who can afford it. '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,' he told Bernama after a visit to the Royal Malaysian Customs Department here. Previously, Finance Minister II Amir Hamzah Azizan had projected that the improved SST would generate revenue of RM51.7 billion in 2025, up from the earlier SST collection forecast of RM46.7 billion. On June 9, the government announced a targeted revision of the Sales Tax rates as well as expansion of the scope of the Service Tax, effective July 1, 2025. The Sales Tax rate remains unchanged for essential goods, while a rate of either five or 10 per cent applies to discretionary and non-essential goods. The scope of the Service Tax will be expanded to include new services such as leasing or rental, construction, financial services, private healthcare, education, and beauty services.
The Sun
3 days ago
- Business
- The Sun
Govt expects additional SST revenue of RM5b in 2025
PETALING JAYA: The Sales and Service Tax (SST) collection is expected to increase by RM5 billion in 2025 and by RM10 billion in 2026 following the review and expansion of the tax scope, which will be implemented starting July 1. Treasury secretary-general Datuk Johan Mahmood Merican said the additional amount is due to the SST review aimed at broadening the national revenue base. 'The government has taken a progressive approach by expanding the tax base, with the tax burden being skewed towards those who can afford it. '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,' he told Bernama after a visit to the Royal Malaysian Customs Department here. Previously, Finance Minister II Amir Hamzah Azizan had projected that the improved SST would generate revenue of RM51.7 billion in 2025, up from the earlier SST collection forecast of RM46.7 billion. On June 9, the government announced a targeted revision of the Sales Tax rates as well as expansion of the scope of the Service Tax, effective July 1, 2025. The Sales Tax rate remains unchanged for essential goods, while a rate of either five or 10 per cent applies to discretionary and non-essential goods. The scope of the Service Tax will be expanded to include new services such as leasing or rental, construction, financial services, private healthcare, education, and beauty services.
