SST Expansion 2025 Updates

In line with the Government’s continued commitment not to impose Sales Tax on daily essential goods as part of the effort to ease the cost of living for Malaysians, the MOF has agreed to maintain the Sales Tax exemption on selected essential goods.

These Sales Tax-exempt essentials whether locally produced or imported include rice, chicken, beef, vegetables and eggs. In addition, local fish varieties such as selar, tongkol, cencaru and sardines, whether frozen, chilled or fresh, will continue to be exempted from Sales Tax.

Furthermore, the MOF has agreed to extend the Sales Tax exemption to imported apples, oranges, mandarin oranges and dates.

1. Increase in the Registration Threshold 
   A person who provides taxable services exceeding the registration threshold is required to be registered for Service Tax. The table below outlines the revised Service Tax registration thresholds:
   
   

   TAXABLE SERVICE	SERVICE TAX RATE	REGISTRATION THRESHOLD
   		PREVIOUS	REVISED
   Group H – Finance Provision of financial services where fees, commissions or similar payments are charged, subject to certain exclusions.	8%	RM500,000	RM1,000,000
   Group K – Rental or Leasing Services Provision of rental or leasing services for tangible assets, subject to certain exclusions.	8%	RM500,000	RM1,000,000

2. Increase in Annual Sales Threshold
   Tenants classified as Micro, Small and Medium Enterprises (MSMEs) are exempted from Service Tax on rental and leasing services. The table below outlines the revised annual sales thresholds for MSMEs to qualify for the Service Tax exemption:
   
   

   EXEMPTED SERVICE	SERVICE TAX RATE	ANNUAL SALES OF MSME
   		PREVIOUS	REVISED
   Group K – Rental or Leasing Services	Exempted	RM500,000	RM1,000,000

Group C – Wellness Centre

Removal of beauty services from the list of newly taxable services under the Service Tax expansion

MOF has decided not to proceed with the proposed expansion of the Service Tax to include beauty services, including:

• Manicure and pedicure treatments;
• Facial services; and
• Barber and hairdressing services.

Despite the recent amendments, any person affected by the Sales Tax revision and Service Tax expansion is still required to assess and monitor whether the value of their taxable goods and/or taxable services exceeds the registration threshold within any 12-month period.

The business-to-business (B2B) exemption and group relief are still permitted for certain newly taxable services to help reduce the impact of double taxation. The specified conditions for non-reviewable contracts are now available and those eligible will benefit from this until 30 June 2026.

The exemption from being subject to compound, prosecution and penalty until 31 December 2025 does not apply to fraud offences or offences committed intentionally.

If you have any questions about the next steps or how these new measures could impact your business, we are here to support you.