According to BERNAMA News Agency:ncome trap. The government has strategically targeted the approach so that everyday Malaysians continue to benefit from a zero per cent sales tax on essential goods such as chicken, rice, vegetables, cooking oil, and medicine. Additionally, basic construction materials will remain untaxed, and small businesses with revenue below key thresholds are safeguarded through carefully calibrated exemptions.

On June 9, the government announced a targeted revision of the Sales Tax rates and an expansion of the Service Tax’s scope, set to take effect on July 1, 2025. The revisions will keep the Sales Tax rate unchanged for essential goods consumed by the populace, while a rate of either five or 10 per cent will be imposed on non-essential or discretionary goods. The scope of the Service Tax will be broadened to include new services such as rental or leasing, construction, finance, private healthcare, education, and beauty services.

Amir Hamzah highlighted that the SST revision and expansion reflect a more sophisticated tax system that embodies the values of shared prosperity while preventing the widening of the rich-poor gap. The approach asks those with greater capacity to contribute more, with discretionary luxury items and imported premium goods bearing modest tax rates. Additionally, top-tier private education and premium medical services for non-citizens will be taxed, ensuring only the wealthiest citizens and residents contribute their fair share to the country’s revenue base.

The minister emphasized that the additional revenue will be channeled directly into rakyat-centric initiatives such as enhanced cash assistance via the Sumbangan Tunai Rakyat (STR) and Sumbangan Asas Rahmah (SARA) programs, along with improved infrastructure and public services that benefit all Malaysians. Since announcing the planned SST expansion in Budget 2025, extensive stakeholder engagements have been conducted with industry groups and tax practitioners, resulting in a policy that balances fiscal responsibility with social consciousness. Amir Hamzah acknowledged the challenge of broadening the country’s revenue base while protecting the majority of Malaysians, stating that the latest announcement marks a progressive step in that direction.