Effective July 1st of 2025, several significant updates to Malaysia’s Sales and Service Tax (SST) framework will come into play. Malaysia’s Ministry of Finance (MOF) on 27 June 2025 announced that these changes are part of the ongoing efforts to balance government revenue needs with consumer and business affordability.
Imported Fruits Now Exempted from Sales Tax
In hopes of bringing relief to many households, MOF has announced a Sales Tax exemption on four key imported fruits:
- Apples
- Oranges
- Mandarin oranges
- Dates
While the list may seem short, there is no doubt that it is a strategic move. These fruits are not only widely consumed but they also hold cultural and religious significance:
- Dates see a significant surge in imports during Ramadan and Hari Raya as they are a traditional and essential food item among Muslim communities.
- Mandarin oranges experience a sharp rise in imports during Chinese New Year as they are commonly consumed and gifted during this festive season.
- Apples and oranges are a staple fruit in Malaysia’s daily environments.
By removing tax on these imports, the government is offering targeted relief as food prices continue to rise in an already inflationary climate.
Revised Thresholds for Service Tax Registration
Businesses providing the following services are now only required to register for Service Tax once their annual taxable turnover exceeds RM1 million, up from the previous threshold of RM500,000:
- Group K: Leasing or Rental Services
- Group H: Financial Services
This update is expected to ease compliance for small businesses by giving them more room to grow before falling under the Service Tax regime.
Beauty Services Remain Exempt
Initially planned under the SST expansion, services such as:
- Nail treatments
- Facial treatments
- Hairdressing and barber services
will remain exempt from Service Tax. This decision follows public feedback and a subsequent review by the Prime Minister and MOF which resulted in the exclusion of beauty services from the expanded tax scope.
Temporary Exemptions for Offences Until End-2025
To ease the transition into the updated SST framework, the Royal Malaysian Customs Department (RMCD) is offering a temporary grace period until 31 December 2025. During this time, compounds, penalties, and prosecutions will not apply for the following offences:
- Late registration
- Late return filing
- Late payment
- Incorrect declarations
- Invoice or credit/debit note errors
Note: This exemption does not cover fraudulent or intentionally committed offences.
Businesses may also benefit from:
- B2B exemptions: Service Tax may not apply when taxable services are provided between registered businesses in the same supply chain.
- Intra-group relief: Service Tax is exempt on qualifying transactions between companies within the same corporate group.
- Exemptions for non-reviewable contracts: Contracts signed before 1 July 2025 that don’t allow price changes may be exempt (Subject to conditions under STP issued on 29 June 2025).
What This Ultimately Means for Everyone
While not all businesses or consumers will be directly affected, these changes carry important implications for specific sectors:
- Consumers might see a lower price on the aforementioned imported fruits
- Small businesses in leasing and financial services do not have to register for Service Tax until their annual taxable turnover reaches RM 1 Million.
- Beauty service providers can continue operating without changes to their tax position.
- All businesses have a grace period until 31 December 2025 to get their filings, payments, and documentation in order, provided there is no fraud involved.
Adapting to the Latest Tax and SST Changes
These SST changes may not affect every business, but they reflect the ongoing shifts in Malaysia’s tax and regulatory environment. Whether you’re directly impacted or simply want to stay informed, it’s important to stay ahead of what’s coming next.
Our tax advisory team can help you:
- Stay up to date with the latest SST developments
- Evaluate your exposure under revised thresholds and exemption rules
- Plan ahead to avoid disruptions and compliance risks
Talk to us today to ensure you’re aligned with the latest SST updates.
Email: info@battchoo.com
Phone: +603-78809918