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THE Federation of Malaysian Business Associations (FMBA) has called on the government to reconsider and delay the expanded Sales and Services Tax (SST) scheduled to take effect on 1 July, citing serious concerns over its impact on small businesses, consumers, and national inflation.
While acknowledging the government’s fiscal goals, FMBA chairman Datuk Seri Abdul Malik Abdullah stressed that the new tax regime could overwhelm micro, small and medium enterprises (MSMEs), trigger a chain reaction of price increases, and complicate compliance efforts.
“The expanded SST now covers a broader range of goods and services including rentals, leasing, construction, financial services, healthcare and education, with new tax rates ranging from five to ten per cent for selected non-essential goods, and six to eight per cent for additional services,” he said in a statement on Saturday.
“Although certain essential goods remain exempt, the taxation of raw materials and intermediate goods will inevitably raise retail prices, fuelling cost-push inflation,” he added.
Abdul Malik also pointed out that many small and medium enterprises remain unprepared for the broader tax regime, citing insufficient guidance and preparation time.
“Despite the government’s grace period until December 2025, the risk of unintentional non-compliance remains high,” he said.
Previously, the government announced that the revised Sales Tax and expanded scope of the Service Tax would be implemented in a targeted manner to avoid overburdening the public.
Second Finance Minister Senator Datuk Seri Amir Hamzah Azizan said the tax adjustments aim to strengthen Malaysia’s fiscal position by expanding the revenue base.
However, Abdul Malik warned that the multi-layered nature of the SST could distort pricing along supply chains and weaken the competitiveness of Malaysian exports. - June 14, 2025
