KUCHING: The upcoming expansion of the Sales and Service Tax (SST), effective July 1, is expected to significantly increase the cost of living and place greater compliance pressure on businesses throughout Malaysia, including Sarawak.
Advisor to the Sarawak Housing and Real Estate Developers Association (SHEDA) Kuching Branch Ex-Officio, Datuk Sim Kiang Chiok, said that while essential goods such as rice, vegetables, meat, milk, and medicines will remain tax-exempt, many non-essential items will now incur SST rates of between five and ten per cent.
“Items affected include imported fruits, seafood like salmon and cod, essential oils, silk, industrial machinery at five per cent, and even road bicycles and antique artworks at 10 per cent,” he said on Friday.
He cautioned that the expanded tax base would have a knock-on effect on both households and small businesses.
“These taxes will indirectly impact households and small businesses that rely on these products for daily operations or services.”
He said the widened scope of the service tax is another concern for businesses, as more sectors will now be affected.
“Rental and leasing services will be taxed at eight per cent for providers with annual revenue exceeding RM500,000.
“Construction services will be subject to six per cent tax for contractors earning over RM1.5 million, with only limited exemptions. Financial services will be taxed at eight per cent for fee-based services, although basic banking and Islamic financing are excluded,” he added.
“Private healthcare services rendered to foreign patients will also be taxed at six per cent. Private education institutions charging over RM60,000 per student annually, as well as international students in higher education, will likewise be affected. Beauty services will face an eight per cent tax once their revenue surpasses RM500,000 annually.”
These tax changes come on top of several other rising business costs, Sim noted, including the recent implementation of Sarawak’s Labour Ordinance on May 1, which shortens weekly working hours and extends maternity leave from 60 to 98 days.
Additionally, the national minimum wage will rise from RM1,500 to RM1,700, and all businesses will be required to adopt a mandatory e-invoicing system starting next year.
He also pointed out that uncertainty over the potential removal of the RON95 petrol subsidy could further exacerbate inflationary pressures.
“These compounded changes may dampen entrepreneurship, reduce our national competitiveness, and further increase the cost of living in Sarawak and across Malaysia,” he lamented.
On the international front, Sim referred to the looming July 2025 deadline for the resumption of US tariffs on global imports, warning that it has already unsettled global markets and could slow international trade.
“For Malaysian businesses, this adds more pressure and clouds the outlook for 2025,” he argued.
“With cost of living rising and business sentiment weakening, the federal government should review these measures holistically and adopt a more balanced approach that supports small businesses and protects consumer welfare in these challenging times.”