Kuala Lumpur: The Kuala Lumpur and Selangor Indian Chamber of Commerce and Industry (KLSICCI) has urged the government to adopt a strategic, inclusive, and phased approach in expanding the Sales and Service Tax (SST) to avoid unintended burdens on vulnerable groups and micro, small, and medium enterprises (MSMEs).

According to BERNAMA News Agency, KLSICCI President Nivaas Ragavan emphasized that while the chamber acknowledges the government’s fiscal intent to strengthen national revenue and ensure long-term sustainability, the expansion of the SST must be ‘targeted, equitable, and progressive.’ He suggested that instead of broadly taxing essential goods or services used daily by the rakyat, especially the B40 and lower M40 communities, the SST expansion should focus on luxury items, non-essential imports, and high-end discretionary services.

Nivaas explained that such a move would ensure a fairer tax structure, allowing those with greater means to bear a greater share of the tax burden, while protecting the cost of living for the average Malaysian family. He stated that KLSICCI supports the government’s vision for a more robust tax base but calls for a strategic, consultative, and fair approach that protects the interests of the rakyat and the sustainability of the business ecosystem, particularly MSMEs, which form the backbone of the economy.

The government plans to implement a revision of the Sales Tax rates and an expansion of the Service Tax scope effective July 1, 2025, to strengthen the country’s fiscal position by increasing revenue and broadening the tax base. Finance Minister II Datuk Seri Amir Hamzah Azizan noted that these measures aim to improve the quality of the social safety net without burdening the majority of Malaysians.

The Sales Tax rate will remain unchanged for essential goods consumed by the people, while a rate of either five or 10 percent will be imposed on non-essential or discretionary goods. The scope of the Service Tax will be extended to include new services such as rental and leasing, construction, finance, private healthcare, education, and beauty services. This expansion will be accompanied by selective exemptions to avoid double taxation and ensure that certain essential services for Malaysian citizens are not taxed.