KUALA LUMPUR: The Ministry of Finance (MOF) has clarified that agricultural produce grown in Malaysia are not subject to sales tax under the expanded Sales and Service Tax (SST).
The ministry noted that there have been news reports that questioned the application of sales tax on local fruits.
“This arises from the potential confusion of tropical fruits being included in the sales tax gazette order, which itemises the items subject to 5.0 per cent sales tax. Under the expanded sales and services tax that will take effect on July 1, 2025, the sales tax is levied on goods manufactured locally and on imported goods,” it said in a statement.
The MOF said agricultural produce grown in Malaysia are not manufactured, hence they are not subject to sales tax. “As such, the MOF wishes to confirm that fruits locally grown in Malaysia are exempted from sales tax. However, if the fruits are imported, then they would be subject to sales tax. This includes tropical fruits such as bananas, pineapple and rambutans,” it added.
The MOF also addressed the concern of companies that there is insufficient time to implement the service tax by July 1, 2025.
“For companies not currently registered under SST but providing one of the newly taxable services, such as rental, in July 2025, they would need to first establish whether they have reached the revenue threshold of RM500,000 for rental within twelve months.
“If they have reached the revenue threshold in July, then the company will need to register by August and only begin to charge service tax on their services beginning Sept 1, 2025, which is more than two months from now,” said the ministry.
In addition, the MOF added that in “appreciating the need to provide time for affected companies to understand how the SST revisions may apply to them,” the government will provide a grace period until December 2025. “The government will not impose penalties on companies that genuinely have made the effort to comply with the newly revised SST,” it said.
