KUALA LUMPUR: The government is urged to postpone the implementation of the expanded sales and service tax (SST) to January 2026 from July 1, 2025, to allow more lead time for preparation, as several areas still require clarification.
While “cautiously welcoming” the government’s announcement on the review of the expanded SST on Thursday, the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) also called on the government to reduce the expanded SST to a lower rate of four per cent in the first two years (2026–2027) to ease the tax burden on businesses and consumers.
The expanded SST applies to additional services (wellness centres, financial, and healthcare) and three new services (rental or leasing, construction works, and education), it said in a statement today.
“Adequate preparation is crucial to ensure better compliance and smooth implementation,” it said, citing concerns over multiple cost increases coinciding with a challenging global and domestic economic environment, which is exacerbated by the uncertainty surrounding trade tariff policies and ongoing conflicts in the Middle East.
“The effects of rising costs, which have been felt in 2025, are expected to persist or influence the business and economic landscape in 2026,” it added.
Meanwhile, ACCCIM urged the government to raise the registration threshold for service tax on leasing or rental, as well as construction services, to RM3 million from RM1 million.
It also called on the government to raise the tax exemption threshold for small and medium-sized enterprise (SME) tenants to RM2 million in annual sales, from RM1 million announced on Thursday.
“We also propose a longer exemption period of 36 months for non-reviewable and reviewable contracts, to cover all project types due to the nature of the projects and their cycles,” it said.
ACCCIM said it will continue to engage with its members and industry stakeholders to provide constructive feedback and solutions to the government to soften the impact of the SST on businesses and households.
