KUALA LUMPUR (March 30): The Socio-Economic Research Centre suggests the government pause the 6–8% service tax on services like rent and leasing, professional fees, construction, healthcare and education, introduced from July 1, 2025, to help companies with short-term cash flow.
“... Maybe the government can consider [the suspension] for (a) period (of) three months, then review every three months depending on the situation,” SERC executive director Lee Heng Guie said during a media briefing on Monday.
As part of its proposals to support industries and businesses, Lee suggested implementing a Targeted Repayment Assistance Program by banks for micro, small and medium-sized enterprises (MSMEs) facing cash flow stress.
Besides that, SERC called for the government to lower the current 85% minimum of the estimated tax for the preceding year for companies submitting the CP204 form to 50%, suspend the 10% penalty if the final tax exceeds the threshold by more than 30% and allow any overpaid tax to be offset against the current year’s liabilities, given businesses have limited visibility on their current performance.
Among other proposals highlighted, Lee said there was a need to review electricity tariffs under the Time of Use (ToU) scheme; reduce SST on energy products or introduce "green levies" tax breaks; provide a full SST waiver on solar equipment; and provide targeted subsidies for fertiliser, fuel and electricity to support farmers in the agriculture and plantation sectors.
"The energy and agriculture sectors are interconnected because higher fertiliser costs [due to spiking fuel prices] will affect production, and if farmers cannot afford them, it will eventually lead to food shortages, ultimately resulting in a food crisis," he said.
The proposals by SERC come amid a sharp escalation in global oil prices following the war in West Asia, which has disrupted supply chains and pushed Brent crude above US$100 per barrel, significantly increasing cost pressures for businesses and the government’s subsidy burden.