Malaysia Expands Sales and Service Tax July 2025

Malaysia will implement revised Sales Tax rates and expand the Service Tax to include sectors such as construction, financial services, property rentals, private healthcare, education, and beauty services starting July 1, 2025. Non-essential goods will face a sales tax rate of 5% to 10%. Companies offering newly taxable services must determine if they exceed the RM500,000 annual revenue threshold and have until December 2025 to register before penalties apply. The Finance Ministry has assured that essential goods and services remain exempt to protect most Malaysians, and additional revenue will be used to strengthen social safety nets. Business groups, including ACCCIM, have called for implementation delays and further consultation, citing concerns over higher costs and inflation. The government asserts that the measures are targeted and designed to minimize negative effects on MSMEs, businesses, and consumers.