FMM In The News: THE MALAYSIAN RESERVE, June 12, 2025
THE Federation of Malaysian Manufacturers (FMM) has urged the government to defer the expanded Sales and Service Tax (SST) set to take effect on July 1, 2025, warning that the move is too soon, too broad, and risks pushing up costs and inflation.
“The untimely implementation of the expanded scope of taxes will exert inflationary pressure… businesses already grappling with rising costs may have no choice but to pass these additional burdens on to consumers,” said FMM president Tan Sri Datuk Soh Thian Lai.
The new sales tax orders will subject 4,806 tariff lines to a 5% tax, including machinery, equipment, and technical tools used in manufacturing.
Only 359 Harmonised System (HS) codes remain exempt or zero-rated – meaning about 97% of goods will be taxed.
FMM warned that taxing capital goods like machinery will raise investment costs and delay industrial upgrades.
Although no penalties will be imposed until Dec 31, businesses have under three weeks to adjust systems and pricing.
The expanded 8% service tax now covers leasing, construction, education, healthcare, and financial services.
FMM estimates this could increase annual costs by RM24,000 to RM60,000 per rented premise.
“Clearer guidelines and a broader exemption list are urgently needed,” said Soh, adding that manufacturers offering mixed goods and services face implementation uncertainty.
FMM also reiterated its call to reinstate GST, calling it a more transparent and efficient tax model that avoids the cascading cost effect of SST.
“Instead of widening a narrow and cascading tax system… GST offers a more efficient, transparent and broad-based solution,” Soh said. –TMR