Malaysia to introduce revised sales tax, expand services tax from July 1
FILE PHOTO: A view of the city skyline in Kuala Lumpur, Malaysia September 27, 2021. REUTERS/Lim Huey Teng/File Photo
KUALA LUMPUR :Malaysia will revise its sales tax rate and also widen the scope of its services tax from July 1, the finance ministry said on Monday, as the government looks to boost its revenue and strengthen its fiscal position.
A sales tax rate of 5 per cent to 10 per cent will be imposed on non-essential and luxury goods, such as king crab, salmon, imported fruits, racing bicycles, and antique artworks, the ministry said in a statement.
The services tax will be expanded to include property rentals or leasing, construction, financial services, private healthcare, education and beauty services, it said.
"This measure aims to strengthen the country's fiscal position by increasing revenue and broadening the tax base to improve the quality of the social safety net without burdening a majority of the people," the ministry said.
Prime Minister Anwar Ibrahim had said during the government's budget announcement last October that the sales and services tax would be progressively expanded. The expansion of the tax was delayed from its initial implementation in May amid concerns from businesses.
The Federation of Malaysian Manufacturers had in April urged the government to defer the expansion of the scope of the tax, in light of tariff and global trade uncertainties that it said could raise operating costs this year.
The finance ministry said there will be selected exemptions for the tax to avoid double taxation and to ensure that Malaysian nationals were not taxed for certain essential services.
Penalties against companies for non-compliance with the tax's legal requirements will not be imposed until December 31, the ministry added.
