KUALA LUMPUR (Oct 18): The federal government is expanding the scope of the sales and service tax (SST) again to raise tax revenue. 

Starting May 1, 2025, sales tax will be imposed on non-essential items, including imported premium items, such as salmon and avocado, Prime Minister Datuk Seri Anwar Ibrahim announced in his Budget 2025 speech on Friday.  

On the same date, fee-based financial services will be included under the scope of coverable services of the service tax. 

“To ensure business continuity, the government will conduct engagement sessions with stakeholders and related industries before finalising the scope of expansion and tax rates to be imposed,” Anwar said.

To recap, at the start of 2024, the government expanded the service tax scope to include maintenance (preventive and corrective), brokerage, underwriting and karaoke services at a rate of 8%.

Other services added to the scope of the service tax included food and beverage, telecommunications and parking space services, at a rate of 6%. 

The bulk of additions to taxable services in 2024 were announced in Budget 2024 and were expected. 

However, what was not was the abrupt effective date as well as the surprise inclusion of maintenance and repair services under the taxable scope of services.

A shocked tax fraternity and the fact that some businesses were unaware of the changes prompted the Ministry of Finance to delay the new tax amendments’ effective date to quell confusion on the ground.

Click here for all you need to know about Malaysia's Budget 2025.