KUALA LUMPUR : The revision of Malaysia’s sales and service tax (SST) regime represents a deliberate fiscal strategy to place the nation’s public finances on a more sustainable trajectory, according to leading tax professionals.
PwC Malaysia Tax Leader Steve Chia noted that the review, outlined in the 2025 national budget last October, should not come as a surprise and encouraged the public to interpret the adjustments within a broader economic framework.
“This revision supports Malaysia’s medium-term fiscal objectives, but a longer-term revenue strategy is still required to ensure consistent and sustainable contributions to the national budget,” Chia said in a statement to Bernama. He added that despite the wider net cast by the expansion, the government remains committed to limiting the scope to selected non-essential goods and business-to-business (B2B) services, minimising direct impact on the rakyat.
Finance Minister II Amir Hamzah Azizan recently announced that the revised SST structure would come into effect on 1 July, in line with government efforts to strengthen fiscal resilience and bolster public welfare initiatives.
Chia highlighted that one of the key implementation challenges would be ensuring that additional costs do not cascade through the supply chain and burden consumers. He acknowledged that the government had engaged actively with relevant stakeholders—including industry associations and tax professionals—since the budget announcement to better understand sector-specific implications.
“These revisions are not made in isolation. They are informed, targeted decisions designed to expand the tax base while safeguarding the general public from unnecessary hardship,” he said. “The government has been prudent in identifying the areas for rate adjustment and scope expansion, maintaining a clear emphasis on protecting public welfare.”
KPMG Malaysia Head of Tax Soh Lian Seng echoed the sentiment, describing the current SST framework as less comprehensive than the former goods and services tax (GST). He said the revision appears to be part of a broader push towards a more progressive tax structure.
“This is a calculated move to improve revenue collection and fiscal consolidation in the medium term,” Soh said, adding that by broadening the base and refining the SST scope, the government is aiming to promote both fairness and efficiency in the tax system.
Soh also predicted a temporary increase in consumer spending ahead of the 1 July implementation date, similar to patterns observed prior to the GST rollout in 2015. However, he noted that such behaviour is typically short-lived.
“While some inflationary concerns may emerge, the overall impact is expected to be modest. With various exemptions and relief measures in place, the revised SST should ultimately contribute positively to the national coffers and support the broader goal of fiscal sustainability,” he added.
-Bernama
