PUTRAJAYA: Locally grown agricultural produce will remain tax-exempt under the revised Sales and Services Tax (SST) framework.
The Finance Ministry (MOF) said this in response to recent news reports questioning the application of Sales Tax on local fruits.
The confusion arose following the inclusion of tropical fruits such as bananas, pineapples, and rambutans in the Sales Tax Gazette Order PU(A) 170/2025, which lists items subject to a 5 per cent Sales Tax beginning July 1.
However, MOF stressed that Sales Tax only applies to goods that are manufactured or imported. As agricultural produce grown in Malaysia are not considered manufactured, they are not subject to the tax.
“Fruits locally grown in Malaysia are exempted from Sales Tax. However, if the fruits are imported, then they would be subject to Sales Tax,” it said in a statement today (June 11).
In a separate note, MOF also addressed industry concerns regarding the timeline for implementing the revised Service Tax, especially on newly taxable services such as rental.
Companies that are not currently registered under SST but provide newly taxable services will first need to determine whether their rental revenue surpasses the RM500,000 threshold within a 12-month period.
“If they reach the threshold in July, registration must be done by August, and they will only begin charging Service Tax from September 1,” the ministry stated.
To support a smooth transition, the government has introduced a grace period until December 2025, during which no penalties will be imposed on businesses that demonstrate a genuine effort to comply with the revised SST rules.
“The government appreciates the need for time to understand the SST changes and is committed to assisting affected businesses through this transition period,” it said.
