What’s New in Malaysia SST 2025:
Tax Rate Revisions & Service Scope Expansion
In line with ongoing fiscal reforms, the Ministry of Finance has revised both the Sales Tax (SST) rates and the scope of Service Tax in Malaysia. These changes, effective 1 July 2025, aim to enhance revenue while ensuring a fairer taxation structure.
Here’s a summary of what businesses and consumers need to know:
Updated Sales Tax Rates
Effective July 2025, certain discretionary goods are subject to new Sales Tax rates:
Expanded Scope of Service Tax
The Service Tax (6–8%) now covers five (5) new categories. Key details are summarized below:
1. Leasing or Rental Services
Tax Rate: 8%
Applicable To: Service providers earning > RM1,000,000/year
Exemptions Include:
a. Non-reviewable contracts (exempted for 12 months)
b. Residential building rentals
c. Reading materials
d. Financial leases
e. Rentals involving assets outside Malaysia
f. MSMEs with revenue < RM500,000
g. B2B transactions and group relief
2. Construction Services
Tax Rate: 6%
Applicable To: Contractors with annual revenue > RM1,500,000
Exemptions Include:
a. Residential/public amenity construction
b. Contractors earning < RM1,500,000
c. B2B transactions and group relief
d. Non-reviewable contracts (12-month exemption)
3. Financial Services (Phased Implementation)
Tax Rate: 8%
Applicable To: Fee-/commission-based services earning > RM1,000,000
Exclusions:
a. Interest/profit from Shariah financing
b. FX and capital market gains
c. Life/medical/family takaful brokerage
d. Credit/charge card fees
e. Basic banking (e.g. deposits, current accounts)
f. Exported services & punitive charges
Exemptions Include:
a. Labuan-related services
b. B2B transactions
c. Shariah-compliant fees
d. Bursa Malaysia-related services
4. Private Healthcare Services
Tax Rate: 6%
Applicable To: Providers earning > RM1,500,000
Included:
a. Licensed private healthcare (Act 586)
b. Traditional & complementary medicine
c. Allied health services (for non-citizens)
Exemptions:
a. Public healthcare
b. Private university healthcare (Act 30 & Act 173)
c. Services for Malaysian citizens (including physiotherapy, TCM, speech therapy, etc.)
5. Education Services
A. Pre-school to Secondary Education
Tax Rate: 6%
Applicable if: Annual tuition fee exceeds RM60,000/student
Exemptions:
a. Public schools
b. Students with Disabilities (PWD, Malaysian citizens)
B. Higher Education & Language Centres
Tax Rate: 6%
Applicable to: Services for non-citizens only
Exemptions:
a. Services for Malaysian citizens
Final Thoughts
These updates represent a significant step in Malaysia’s tax reform agenda. Businesses affected by these changes should review their tax obligations and consider adjusting their pricing or contract structures accordingly.
Need Assistance?
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References:
1. https://www.mof.gov.my/portal/en/news/press-release/targeted-revision-of-sales-tax-rate-and-expansion-of-service-tax-scope-effective-1-july-2025
2. https://www.mof.gov.my/portal/pdf/siaran-media/expansion-sst-scope.pdf
3. https://www.mof.gov.my/portal/pdf/siaran-media/cukai-sst.pdf
4. https://mof.gov.my/portal/ms/berita/siaran-media/semakan-semula-peluasan-cukai-jualan-dan-cukai-perkhidmatan-sst-ambil-kira-maklum-balas-rakyat-dan-industri
