Starting 1st July, Malaysia’s Sales and Service Tax (SST) will be expanded to include a wider range of goods and services — from luxury foods like truffles and imported fruit, to spa treatments and even private preschool fees.
But before you panic, essential daily items such as rice, sugar, cooking oil, books, and medicines will remain tax-free. So not everything is getting more expensive.
Photo via RinggitPlus
Why Expand the SST?
According to Finance Minister II, Datuk Seri Amir Hamzah Azizan, the expanded SST is part of the MADANI economic reform plan, which aims to strengthen national revenue without putting too much strain on everyday Malaysians.
“The extra revenue will go towards improving public services, upgrading infrastructure, and increasing cash aid to the people,” he said in a report by New Straits Times.
What Stays Tax-Free?
Many essentials will continue to be exempt from SST at 0% tax:
Basic Foods:
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Chicken, beef, fish, prawns
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Local fruits and vegetables
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Rice, sugar, cooking oil
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Flour, pasta, noodles, milk
Other Essentials:
Industrial & Agricultural Items:
What Will Be Taxed?
From 1st July, SST at 5% or 10% will apply to certain non-essential and luxury goods.
5% Sales Tax Applies To:
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Premium foods: King crab, salmon, cod, truffles
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Imported fruits
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Lifestyle goods: Essential oils, silk
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Certain industrial machinery
10% Sales Tax Applies To:
New Services Now Taxed – With Some Exemptions
The service tax rate (between 6% and 8%) will now cover six additional sectors. However, there are exemptions to protect low-income groups and small businesses.
1. Construction Services – 6%
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Taxed: Firms earning over RM1.5 million a year
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Exempt: Affordable housing projects, residential builds, B2B transactions
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Grace Period: 12-month delay for existing contracts
2. Financial Services – 8%
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Taxed: Fee/commission-based services like loan processing
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Exempt: Basic banking, Islamic finance, remittances, Syariah-compliant fees, Labuan entities, Bursa Malaysia, B2B
3. Private Healthcare – 6%
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Taxed: Non-citizens
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Exempt for Malaysians: Traditional & complementary medicine (Malay, Chinese, Indian, Islamic, etc.), allied health services like physiotherapy and speech therapy
4. Private Education – 6%
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Taxed: Preschools and schools charging over RM60,000 per year, and higher learning institutions with foreign students
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Exempt: Malaysian citizens and persons with disabilities (OKU)
5. Beauty Services – 8%
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Taxed: Businesses earning over RM500,000 a year
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Includes facials, haircuts, beauty treatments, and spa services
6. Leasing & Rental Services – 8%
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Taxed: Companies making over RM500,000 annually from leasing
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Exempt: Residential rent, reading materials, foreign assets, financial leasing, B2B deals, SMEs and micro businesses
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Grace Period: 12-month exemption for old contracts
No Immediate Penalty for Mistakes
To give businesses time to adapt, no penalties will be enforced until the end of 2025 — as long as there is clear effort to comply. The Ministry of Finance and the Royal Malaysian Customs Department will also release detailed guidelines and FAQs to help companies navigate the updated system.
