The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) has cautiously welcomed the Government’s announcement dated 27 June 2025 on the review of the expanded SST, taking into account ACCCIM’s concerns and feedback regarding the timing, spillover effects, scope of SST expansion, SST rate and the registration threshold of taxable services. The revision includes the exemption of SST for selected fruits, higher threshold for rental and leasing services, financial services and the exemption of selected beauty services.

In the ACCCIM’s press statement dated 10 June and submission of our feedback to YAB Prime Minister on 13 June, we have respectfully urged the Government to defer the implementation of SST to January 2026, starting with 4% for first two years; the taxable services threshold registration be raised higher to RM3 million for rental/leasing services, and construction services, and the threshold of exemption from paying tax for SMEs tenants be raised higher to RM2 million annual sales. We also proposed longer exemption period of 36 months for non-reviewable and reviewable contracts to cover all project types due to the type of projects and project cycles.

While higher rental/leasing threshold registration to RM1 million from RM500,000 previously and also the higher exemption threshold for SMEs tenants to RM1 million annual sales from less than RM500,000 would ease the compliance and financial burden, benefitting more SMEs, we think a higher threshold is more appropriate. Higher threshold is better aligned with the definition of SMEs for the services and other sectors — the upper bound of the MSME is RM3 million in annual revenue for small enterprises.

ACCCIM reaffirms that the service tax rate for additional services (wellness centre, financial, and healthcare) and three new services (rental or leasing, construction works and education) be lowered to 4% in the first two years (2026-2027) to ease the tax burden on businesses and consumers. Additionally, we would like the Government to reconsider implementing the SST in January 2026, allowing more lead time for preparation as there remain areas for clarification. Adequate preparation is crucial for ensuring better compliance and smooth implementation.

Our concern is multiple cost increases are coinciding with a challenging global and domestic economic environment, exacerbated by the uncertainty surrounding trade tariffs policy and ongoing conflicts in the Middle East, which together create significant economic headwinds. The effects of rising costs, which have been felt in 2025, are expected to persist or influence the business and economic landscape in 2026.

ACCCIM will continue to engage with our members and the industry stakeholders to provide constructive feedback and solutions to the Government, so as to soften the impact of SST on businesses and households.