PM Anwar reduces service tax on MSME rentals to 6%, offers new firms a one-year deferment and raises the tax exemption threshold to RM1.5 million turnover
KUALA LUMPUR: The service tax on rentals for micro, small and medium enterprises has been reduced to 6% from 8%.
Prime Minister Datuk Seri Anwar Ibrahim announced the reduction in his New Year’s address, acknowledging the tax had been a concern since its implementation last July.
The 8% tax applies to the rental of non-residential premises such as offices, warehouses and commercial assets.
Anwar, who is also finance minister, said the reduction would result in an annual revenue loss of nearly RM500 million for the government.
He also announced a one-year deferment of the service tax on rentals for newly established MSMEs.
Furthermore, the tax exemption threshold for MSMEs has been significantly increased.
Businesses with an annual turnover of up to RM1.5 million will now be exempt, extending the previous threshold which applied only to those with turnover between RM500,000 and RM1 million.
“We have decided to exempt MSMEs with annual sales ranging from RM500,000 to RM1 million, and we are now extending the exemption to those with total annual sales of up to RM1.5 million,” he said.
