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What Will Cost More in Malaysia Starting 1st July: Here’s What to Know About the Expanded SST

by Shivashangkari Chandran
June 11, 2025
Image Source: The Straits Times

Image Source: The Straits Times

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Malaysians are bracing for charges as the government rolls out an expanded Sales and Service Tax (SST) framework beginning 1st July 2025, under the MADANI economic reforms. The move is aimed at boosting government revenue while trying to maximize the burden on essential goods and services.

Finance Minister II Datuk Seri Amir Hamzah Azizan said the additional revenue generated will be channeled into improving public services, expanding infrastructure, and enhancing direct aid to the people.

What Will Be Taxed

The updated SST introduces new 5% and 10% sales tax tiers for selected goods, especially luxury or non-essential items, while expanding the service tax scope from 6% to 8% across more industries.

Still 0% (No Charge)

Essentials remain untouched and will continue to be tax-free. These include:

  • Local Fruits and Vegetables
  • Chicken, Beef, Fish, Prawns
  • Sugar, Cooking Oil and Rice
  • Flour, Milk, Pasta, Noodles
  • Medicines and Pet Food
  • Book, Journals, Newspapers
  • Construction materials (Cement, Sand, Stones)
  • Farming equipment and fertilizers 
Chow Kit Market: The Largest Wet Market in Kuala Lumpur
Image Sources: The Beat Malaysia
5% Sales Tax Applies To:
  • Seafood like King Crab, Salmon and Cod
  • Truffle Mushrooms
  • Imported Fruits
  • Essential Oils
  • Silk
  • Industrial Machinery
Premium Supermarket Village Grocer expanded the 27th outlet at Hartamas Shopping Centre
Image Source: Malaysiakini
10% Sales Tax Applies To:
  • Racing bicycles
  • Antiques and hand printed artworks
Central Market | Attractions in KL | Cititel Mid Valley
Image Sources: Cititel Mid Valley

Expanded Services Tax Breakdown:

8% Financial Service Tax
  • Applies to fee-based or commission-based services (e.g . loan processing fees)
  • Exemptions: Basic banking, Islamic financing, capital markets, foreign exchange gains, outwards remittances, Bursa Malaysia, Labuan entities, and B2B transactions
Malaysia's top funds say banking sector ripe for consolidation | Reuters
Image Sources: Reuters
6% Construction Services Tax
  • Applies to companies earning over RM1.5 million
  • Exemptions: Residential and public housing projects, B2B transactions and 12-months grace period for existing contracts
Top Civil Engineering Construction Company in KL Malaysia | LTE
Image Sources: ITEBUILDERS
6% Private Healthcare Tax
  • Applies only to non-citizens receiving private healthcare in Malaysia
  • Malaysians are fully exempt, including Malay, Chinese, Indian, Islamic medicine, homeopathy, chiropractic and allied health services like physiotherapy or speech therapy.
Related:  MADANI Government Assures Full Use of RM30 Million Allocation for Tamil Schools
Private National VS International School Curriculum | Matrix Global Schools - Blogs
Image Source: Matrix Global Schools
6% Private Education Tax
  • Applies only to high-income private institutions: Preschools, primary, and secondary charging over RM60k per year
  • Private higher education for International students 
  • Exemptions: Malaysians and persons with disabilities 
8% Beauty Services Tax
  • For businesses earning over RM500K annually, covering Facials, Hairdressings, Other Beauty and Aesthetic treatments.
Top 10 Best Facial Salons in KL For Your Next Pamper Sesh
Image Source: Grazia Malaysia
8% Leasing and Rental Services Tax
  • For leasing/rental businesses exceeding RM500K in revenue:
What Is the Difference Between Leasing and Renting? - Experian
Image Source: Experian
  • Exemptions: Residential rentals, Reading Materials, Overseas Assets, Financial Leases, B2B transactions, Micro, Small and Medium Enterprises (MSMEs), and 12 month grace period for existing contracts.

To ease their transition, authorities will NOT TAKE PUNITIVE ACTION until the end of 2025, provided companies demonstrate effort and intent to comply with the new rules.

The Finance Ministry and Royal Malaysian Customs Department will issue detailed guidelines, FAQs and sector-specific briefings in the upcoming weeks to support businesses and the public.

Why Should SST Revamp Be Taken Seriously?

The updated SST framework is part of the government’s broader MADANI reform strategy, aimed at improving fiscal stability while cushioning lower-income groups from direct impact. By targeting non-essential luxury goods and higher-income sectors, the government hopes to balance public revenue needs with fair taxation.

Whether you’re a parent with kids in private schools, a beauty shop owner, or someone simply purchasing imported fruits or fine art, it is crucial to take note of the changes and plan accordingly.

Sources: SAYS

Follow us on Instagram, Facebook or Telegram for more updates and breaking news. 

Filed Under madaniMalaysiaSST
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