Kuala Lumpur: The Ministry of Finance (MOF) has clarified that agricultural produce grown in Malaysia are not subject to sales tax under the expanded Sales and Service Tax (SST): The ministry noted that there have been news reports that questioned the application of sales tax on local fruits.

According to BERNAMA News Agency, this arises from the potential confusion of tropical fruits being included in the sales tax gazette order, which itemizes the items subject to 5.0 per cent sales tax. Under the expanded sales and services tax that will take effect on July 1, 2025, the sales tax is levied on goods manufactured locally and on imported goods, it said in a statement.

The MOF stated that agricultural produce grown in Malaysia are not manufactured, hence they are not subject to sales tax. The ministry confirmed that fruits locally grown in Malaysia are exempted from sales tax. However, imported fruits would be subject to sales tax, including tropical fruits such as bananas, pineapples, and rambutans.

The MOF also addressed concerns from companies about the insufficient time to implement the service tax by the July 2025 deadline. For companies not currently registered under SST but providing newly taxable services, such as rental, they need to establish whether they have reached the revenue threshold of RM500,000 for rental within twelve months by July 2025.

If companies reach the revenue threshold in July, they are required to register by August and begin charging service tax on their services starting September 1, 2025, which provides over two months for compliance. Additionally, the MOF announced a grace period until December 2025, during which the government will not impose penalties on companies making genuine efforts to comply with the revised SST.