The government’s decision to fine-tune the expanded scope of the Sales and Service tax, or SST, reflects its commitment to a targeted approach rather than a blanket mechanism. Finance Minister II, Datuk Seri Amir Hamzah Azizan, explained that the Ministry of Finance (MOF) carefully considered which goods and services would be most affected before revising the list of items subject to the tax.

Amir Hamzah emphasised that the government’s priority is to ensure fairness in the implementation of taxation policies. He said that focusing on a targeted system allows the government to minimise unnecessary financial strain on those who need support the most.

Targeted Subsidies and SST Revisions

Last year, the government introduced targeted diesel subsidies in Peninsular Malaysia. A similar targeted subsidy for RON95 petrol is expected to be implemented in the second half of this year. These measures are part of broader efforts to direct government assistance towards those who need it, while avoiding a blanket subsidy approach that can lead to inefficiencies and benefit those who do not require aid.

In June, MOF announced that a five to ten percent tax rate would apply to non-essential goods beginning on 1 July. The scope of the service tax was also expanded to cover additional sectors such as rental and leasing, construction, financial services, private healthcare, and private education.

Exemptions to Ease the Burden on Low-Income Households

Following feedback from the public and further review, the government decided to exempt imported apples and oranges from the expanded SST. Amir Hamzah noted that many families in the B40 income group rely on these imported fruits as affordable sources of nutrition. By removing these items from the tax list, the government aims to reduce the burden on lower-income households.

Additionally, the Ministry of Finance decided not to include beauty services such as manicures, pedicures, facials, and hairdressing in the expanded SST scope. This decision was made in response to public concerns about the potential financial impact of taxing these services, which are often considered essential personal care by many Malaysians.

Commitment to Fair and Responsive Policy

The ministry also increased the threshold for service tax registration for businesses involved in leasing, rental, and financial services. The threshold was raised from five hundred thousand ringgit to one million ringgit in annual revenue. This change is intended to reduce the number of small businesses affected by the new tax rules, ensuring that only larger enterprises are required to register for and collect the service tax.

Commitment to Fair and Responsive Policy

Amir Hamzah reaffirmed the government’s commitment to fairness by highlighting its willingness to adjust policies based on public feedback. He said that after implementing new measures, the administration would continue to gather input from affected communities and make necessary changes to ensure equitable outcomes.

“I hope people are happy that we adjusted the SST,” he said, expressing confidence that the refinements to the tax scope demonstrate the government’s dedication to balancing revenue needs with the financial well-being of the people.

(Source: Free Malaysia Today)

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• Apples
• Datuk Seri Amir Hamzah Azizan
• Expanded SST
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• Ministry of Financ
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• Sales and Service Tax
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• Targeted Approach
• Tax