THE expanded scope of the sales and service tax (SST) that took effect on July 1 was designed with targeted and progressive mitigation measures so small and medium enterprises (SMEs) remain competitive and are not overburdened.
Deputy Finance Minister Lim Hui Ying (picture) said the government remains committed to strengthening the country’s fiscal position while safeguarding public welfare.
“This implementation has been designed with targeted and progressive mitigation measures so that SMEs are not burdened and remain competitive,” she told the Dewan Rakyat during Question Time today.
She was replying to a supplementary question from Onn Abu Bakar (PH–Batu Pahat), who asked whether the government would review the SST expansion amid concerns over higher costs of goods and services and pressure on low-income groups.
Lim said any new tax policy or enhancement is implemented cautiously and only after engagement sessions with industry stakeholders.
She said one of the measures introduced after these discussions was setting a high registration threshold for newly taxed services at RM1 million in annual turnover.
“The threshold covers rental or leasing services and fee-based financial services. For construction services and private healthcare services, the threshold is set at RM1.5 million a year.
“In addition, service tax exemptions are given to small traders providing rental and leasing services with annual income of less than RM1 million,” she said.
Lim said, after further feedback, the government also decided to exclude beauty services, which were initially proposed under the expanded service tax scope.
“These measures ensure that the expansion of the SST scope is implemented prudently without burdening consumers and SMEs.
“Instead, it supports efforts to gradually strengthen government revenue to ensure long-term fiscal sustainability without affecting economic growth,” she said.
Source: https://themalaysianreserve.com/2025/11/24/targeted-sst-expansion-aims-to-protect-smes-while-strengthening-revenue/