Kuala Lumpur: The Malaysian government anticipates a significant increase in revenue from the Sales and Service Tax (SST), with an additional RM5 billion expected in 2025 and RM10 billion in 2026. This forecasted increase follows a comprehensive review and expansion of the tax’s scope, set to take effect starting July 1.

According to BERNAMA News Agency, Treasury secretary-general Datuk Johan Mahmood Merican emphasized that the additional revenue results from a strategic revision of the SST aimed at broadening the national revenue base. The government has adopted a progressive approach, expanding the tax base while ensuring that the tax burden is primarily absorbed by those who can afford it. This targeted implementation is reflected in the determination of the scope and subjects of the Service Tax and Sales Tax.

Previously, Finance Minister II Amir Hamzah Azizan highlighted expectations for the improved SST to generate a total revenue of RM51.7 billion in 2025, surpassing the earlier forecast of RM46.7 billion. The government announced on June 9 a targeted revision of the Sales Tax rates and an expansion of the Service Tax scope, effective July 1, 2025. While the Sales Tax rate remains unchanged for essential goods, discretionary and non-essential goods will be taxed at either five or ten percent.

The Service Tax’s expanded scope will now encompass new services, including leasing or rental, construction, financial services, private healthcare, education, and beauty services. Johan noted that companies will commence charging the Service Tax from September, allowing them time to prepare.

In July, service providers must determine if they have reached the annual revenue threshold subjecting them to the Service Tax. By the end of the month, they need to review their status to ensure eligibility. Should they meet the revenue threshold, the registration process will begin in August, followed by the issuance of invoices for taxable services provided.