Expanded SST — Here's A List Of Everything That Will Cost 5 To 10% More Starting 1 July
While most Malaysians aren't directly affected, this expanded SST will impact mid- to high-income households, and businesses in the construction, healthcare, beauty, and education sectors.
Cover image via Starting 1 July, the government will roll out an expanded Sales and Service Tax (SST) that will affect everything from imported fruits and truffle mushrooms to preschool fees and beauty treatments
But don't panic just yet: essentials like rice, sugar, cooking oil, books, and medicine will remain tax-free.
Finance Minister II Datuk Seri Amir Hamzah Azizan said the revamp is part of the MADANI economic reforms to strengthen government revenue, with a targeted approach that avoids putting pressure on Malaysians.
"The additional revenue will go towards improving public services, expanding infrastructure, and increasing direct aid to the people," he said during a closed-door briefing with media.
Here's a quick breakdown of what's changing:
What's being taxed now? The government has introduced 5% and 10% sales tax tiers for selected luxury or non-essential items.
Still 0% (No change):
Essentials like:
- Chicken, beef, fish, prawns
- Local fruits, vegetables
- Rice, sugar, cooking oil
- Flour, pasta, noodles, milk
- Medicine, pet food, books, journals, newspapers
- Construction materials like cement, sand, and stones
- Farming equipment and fertilisers
Image via Yusof Mat Isa/Malay Mail
5% sales tax:
- King crab, salmon, cod
- Truffles
- Imported fruits
- Essential oils
- Silk
- Industrial machinery
10% sales tax:
- Racing bicycles
- Antiques and hand-painted artworks
The government has also expanded the service tax, ranging from 6% to 8%, to cover six new sectors, with some exemptions to protect smaller businesses and lower-income groups.
6% construction services tax:
For construction services, the 6% tax will apply to service providers exceeding RM1.5 million in revenue.
Residential construction and public housing-related works are exempt, and exemptions also apply to business-to-business (B2B) transactions to avoid double taxation, reported the New Straits Times.
Additionally, there will be a 12-month grace period for existing contracts.
Image via Eizairi Shamsudin/New Straits Times
8% financial services tax:
Applies to fee-based or commission-based services, such as loan processing fees.
Exemptions:
- Basic banking services
- Islamic financing
- Foreign exchange gains
- Capital markets, outward remittances
- Shariah-compliant fee structures
- Bursa Malaysia
- Labuan entities
- B2B transactions
6% private healthcare tax:
Only applies to services provided to non-citizens.
Malaysians are fully exempt, including traditional and complementary medicine like:
- Malay, Chinese, Indian treatments
- Islamic medicine, homeopathy, chiropractic
Also exempt:
- Allied health services like physiotherapy, audiology, speech therapy for Malaysians
6% private education tax:
A 6% tax will be imposed on private preschools, primary, and secondary schools that charge more than RM60,000 per year, as well as on private higher education institutions for international students.
Exemptions:
- Malaysian citizens
- Persons with disabilities
8% beauty services tax:
An 8% tax will apply to beauty service businesses earning over RM500,000 a year, covering services such as facials, hairdressing, and other beauty treatments.
Image via Manea The Salon
8% leasing and rental services tax:
An 8% tax will be imposed on companies earning over RM500,000 annually from leasing or rental services, with exemptions for:
- Residential rentals
- Reading materials
- Overseas assets
- Financial leases
- B2B transactions
- MSMEs (Micro, Small & Medium Enterprises)
- 12-month exemption for existing contracts
To give companies time to adapt, no punitive action will be taken until the end of this year, as long as they show compliance efforts
The Finance Ministry and the Customs Department will issue detailed regulations, guidelines, and FAQs in the coming weeks to assist businesses in navigating the updated tax regime.
